Walmart, the biggest retailer in the world by sales, has reported a drop in sales in the U.S. that was unexpected and pointed to mounting pressure on consumers in the low-income area. After Walmart reported the news, its share prices tumbled.
On Thursday, the discount retail chain said its U.S. like for like sales over the 13-week period until April 26, dropped by 1.4%. Walmart had told investors previously it thought sales would be flat.
The company said the drop was due to tax refunds in the U.S. being delayed for consumers, the increase this year in payroll taxes, bad weather, and food inflation that was lower than had been expected.
Mike Duke the CEO at Walmart said the quarter was much more difficult that what they had expected. Nonetheless, the company said it has been able to gain more market share across the country.
Walmart’s international business enjoyed an increase in sales of almost 3% to $33 billion, but the decline in the U.S. meant the retailer’s total sales of $113.4 billion for the three-month period ending April 30, were short of the forecast by analysts of $116 billion.
Shares at Walmart were down 2.4% during premarket trading on Thursday to $77.92, following the release of the company’s financial results.
Profit expectations were reached by the discount retailer on net income that reached $3.8 billion and earnings a share of $1.14.
Walmart announced that core expenses were up 37%, in part because of $73 million in costs related to the Mexican bribery allegations that are currently under investigation by both U.S. authorities and the company. Walmart had projected that those corporate costs would be between $40 million and $45 million for the quarter.