The fastest inflation in 40 years squeezed retailers during the first quarter, alarming investors worried about the broader economy’s outlook.
A consumer shops at a retail store in Morton Grove, Illinois, on July 21, 2021. The fastest inflation in 40 years squeezed retailers during the first quarter, alarming investors worried about the broader economy's outlook. Earnings reports from Walmart, Target and Amazon this month showed higher costs are hurting retailers' operations.
Earnings reports from Walmart, Target and Amazon this month showed higher costs are hurting retailers’ operations. While profits for all companies in the benchmark S&P 500 index grew by about 9% last quarter, retailers’ profits contracted more than 30% from a year ago. They blamed rising costs for raw materials, shipping and labor for the slump.The weak results surprised investors who were closely watching the sector to see how inflation is impacting various businesses.
Target’s profit tumbled 52% from a year ago as costs piled up. Walmart, the nation’s largest retailer, also reported weak profit. Both chains’ revealed that consumers’ spending is shifting, with Walmart executives highlighting a shift to private-label brands from national ones, particularly in lunch meats.
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