Walmart And Target Buck Greedy Corporate Trend Of Padding Profits And Stoking Inflation

  • The stock market is punishing both Walmart and Target for keeping their costs low while the rest of the corporate sector prioritizes profits, making inflation much worse.
  • Walmart CEO Doug McMillon said that “with an inflationary environment, there are things that come along with that…it is swallowing certain costs, so customers don’t have to pay quite as much.”
  • It’s becoming more conspicuous that the current inflation stems from shameless corporations padding their profit margins rather than too much pandemic stimulus.

Jason Lalljee from Insider writes:

“Inflation is hitting everyone hard — even the profitable retail giant Walmart.

A week after the CPI report showed inflation at its greatest year-over-year increase since 1990, Walmart released its earnings, and it had a blowout third quarter while offering a lesson on how to use “pricing power” — or not to.

The retail giant’s sales on Tuesday toppled analyst expectations — and so did its projections for future sales. Maybe it doesn’t sound like a lot for Walmart to project full year earnings per share (on an adjusted basis) of $6.40 up from $6.20 to $6.35, but it’s the third straight quarter that the retailer did so. It’s having a very good 2021. That’s not good enough for the stock market.

On Walmart’s earnings call, CEO Doug McMillon said that “with an inflationary environment, there are things that come along with that and the company’s cost inflation is higher than its retail inflation, meaning it is swallowing certain costs so customers don’t have to pay quite as much. The company’s consolidated gross profit rate — that is, its margin — was down slightly, by 42 basis points.

Later on during the week, Target also reported higher profits than expected, but also reported absorbing higher costs to keep prices down for consumers. Its stock took a hit, with its shares falling as much as 5% because it bucked the higher-profit-margin trend…”

See full story here.



Categories: Business

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