The American shopping giant has cut its annual targets. What are the reasons for that?

The largest US retailer Walmart is groaning under high costs amid inflationary pressures and supply chain problems. After a significant drop in profits in the first quarter, the shopping giant cut its annual targets on Tuesday.

In the three months ended April, Walmart made $2.1 billion on balance, down almost a quarter from a year ago. The high level of US inflation is affecting business, said CEO Doug McMillon. Increasing expenses, such as for fuel and wages, drove up operating costs more than expected.

The annual report was not well received by investors: the share initially reacted before the market with a price loss of more than seven percent. Walmart increased sales in the past quarter by a good two percent to $141.6 billion, slightly exceeding expectations. But analysts had expected more when it came to earnings and business prospects. During the pandemic, US consumption was booming, also thanks to high government aid, but now the tide threatens to turn in view of high inflation and a weaker economy. Walmart’s big rival Amazon has also weakened recently.