Nueva York (CNN Business) — Many shoppers in the US have stopped buying clothing and other discretionary items because highest inflation in four decades it affects your pockets.
That left Walmart (WMT) and other retailers stuck with too many clothes and more expensive things on their shelves. To help clear the backlog, Walmart is cutting prices on some items and marking down products.
“Rising levels of food and fuel inflation are affecting how customers spend,” Walmart CEO Doug McMillon said in a Monday news release. “Clothing at Walmart US requires more discount dollars.”
The company expects a slowdown in customer spending on general merchandise in the second half of the year, McMillon said.
Walmart is the largest retailer in the United States and its decision could prompt rivals to lower prices in these areas.
While lower prices and rebates are good news for shoppers, they mean lower profits for businesses. Clothing and general merchandise are more profitable for Walmart than groceries and consumer goods.
Walmart, in its Monday announcement, cut its earnings outlook for the second quarter and the rest of the year.
Shares of the company fell 9% during after-hours trading. Shares of Amazon (AMZN), Target (TGT) and other retailers also fell on the Walmart news.