Walmart earnings nipped by rising prices; Home Depot’s sale improve |
Walmart Q1 profit dragged down by inflation
NEW YORK — — Walmart reported stronger sales for its fiscal first quarter, but its profit took a beating as the nation’s largest retailer grappled with surging inflation on food and fuel and higher costs from a snarled global supply chain.
The company, South Carolina’s biggest private-sector employer, also on Tuesday cut its full-year earnings forecast, sending shares down more than 11 percent.
“Bottom line results were unexpected and reflect the unusual environment,” said CEO Doug McMillon. “U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected.”
Walmart is among the first major retailers to report quarterly results and is considered a crucial barometer of spending given its size and the breadth of its customer base.
Higher labor and fuel costs as well as higher inventory levels dragged down the company’s profits. Walmart said its employees returned from COVID leave faster than expected, resulting in the company being overstaffed for weeks during part of the quarter. Walmart said that it hired more workers at the end of the year to cover for those on leave. But scheduling challenges have been fixed.
Sales rose 2.4 percent to $141.57 billion, better than the $138.8 billion that analysts had projected.
Home Depot overcomes slow start to year
NEW YORK — Home Depot’s first-quarter sales improved despite a slow spring start and the home improvement chain raised its full-year guidance.
Revenue increased about 4 percent to $38.91 billion, easily beating Wall Street expectations, according to a survey of analysts by Zacks Investment Research. Sales at stores open at least a year, a key indicator of a retailer’s health, climbed 2.2 percent globally and 1.7 percent in the U.S.
Home Depot earned $4.23 billion for the quarter, a 3 percent gain that also topped projections.
However, the quarterly sales exhibited the slowest pace of growth in two years, said Neil Saunders, managing director of GlobalData.
“We do not see an enormous collapse in demand as many households are still willing to invest in and improve their homes; but there is a definite softening on the cards which we have not seen for quite some time,” he said.
Retail sales rise 0.9%, outpace inflation
WASHINGTON — U.S. retail sales rose 0.9 percent in April, a solid increase that underscores Americans’ ability to keep ramping up spending even as inflation persists at nearly a 40-year high.
The Commerce Department said May 17 that the increase was driven by greater sales of cars, electronics, and at restaurants. Even adjusting for inflation, which was 0.3 percent on a monthly basis in April, sales increased. Gas prices fell slightly last month, restraining inflation, after soaring in March in the aftermath of Russia’s invasion of Ukraine.
The report also showed that sales in March were revised much higher, to a gain of 1.4 percent, from 0.7 percent.
FAA to let United use grounded 777s
WASHINGTON — U.S. safety officials are moving to let United Airlines resume using 52 Boeing jetliners that have been grounded since the engine of one of them blew apart over Denver last year.
The Federal Aviation Administration said May 17 that it has approved Boeing Co.’s outline of required fixes to the 777s equipped with Pratt & Whitney engines. A United executive said the airline plans to start using some of the jets within a week.
They were grounded last year after a Hawaii-bound plane suffered an engine failure shortly after leaving Denver and rained broken parts over residential areas. The planes account for about 10 percent of United’s passenger-carrying capacity.
Crew union favors Frontier-Spirit deal
WASHINGTON — The largest union for U.S. flight attendants threw its support May 17 behind Frontier Airlines’ proposal to buy Spirit Airlines after it reached a deal with Frontier on how to combine cabin crews at the two carriers.
The Association of Flight Attendants, which represents crews at both airlines, said the agreement with Frontier covers job, seniority and contract protections.
The union said the deal bars Frontier and Spirit from merging their operations until a new contract is ratified by union members. It said no flight attendants could be furloughed because of route changes that occur during the merger process.
Mergers in the heavily unionized airline industry are often complicated by difficulty in combining separate work forces, so the agreement announced Tuesday could remove one source of potential friction.
Flight attendants at JetBlue Airways, which declared a hostile takeover bid for Spirit on Monday, are represented by the Transport Workers Union. The TWU did not immediately comment on the rival union’s announcement.
In February, Frontier and Spirit announced a stock and cash buyout deal. Spirit shareholders are scheduled to vote on the offer June 10.
Buffett-led firm reveals new stock stakes
OMAHA, Neb. — Warren Buffett’s company has revealed all the investment moves it made in the first quarter, when it spent more than $51 billion on stocks. But Buffett had already shared the biggest investments with Berkshire Hathaway shareholders at the company’s recent annual meeting.
That means investors already knew that Buffett had invested heavily in Chevron, Occidental Petroleum and HP Inc. during the quarter while picking up nearly 4 million more Apple shares and betting that Microsoft’s acquisition of Activision Blizzard will go through.
But the May 16 Securities and Exchange Commission filing also revealed new stakes in Citigroup, Ally Financial, media company Paramount Global, insurer Markel, chemical maker Celanese Corp., and pharmaceutical distributor McKesson Corp.
Berkshire also added 2 million General Motors shares to give it 62 million shares of the automaker.