John Rainey, CFO, Walmart, has said the company has ‘cancelled billions in orders’ to deal with inventory pileups that have amassed over the last few quarters.
In addition to order cancellations, the retail giant also resorted to markdowns in categories that were selling less.
John Furner, CEO and President, Walmart US, said “We feel much better about the back half of the year. We still have the inventory to work through and ingest from the backlogs, as we said. So we need a couple of quarters to do that.”
He said that clearing out apparel excesses was ‘urgent’ in Q2, given that some of these items are seasonal and will be less relevant once Q3 rolls around.
In a call with investors announcing results for the second quarter, the company’s senior management shared this.
Walmart beat expectations for earnings and revenues in Q2 after it slashed its outlook for the quarter last month. Total revenue was US $152.9 billion, up 8.4 per cent, compared to estimates of US $150.81 billion. Walmart US comp-store sales were up 6.5 per cent.
The company said it got a good customer response from those price cuts last quarter. Although it continues to expect that earnings will fall in the second half of the year, it now predicts a smaller drop in profit going forward than it had previously expected.
Being US’ largest retailer, Walmart results are also seen as a measure of the strength of the US economy overall. Experts feel that the results are another sign that, despite worrisome indicators of a possible recession in the months ahead, consumer spending remains strong.
