The Walton family fortune fell by $US11.4 billion ($16.4 billion) after Walmart slashed its earnings outlook for the second time this year.
Shares of the retailer, which is controlled by the family, tumbled by 7.6 per cent in New York trading after it said adjusted earnings per share will decline as much as 13 per cent this year with US shoppers reining in spending on big-ticket items amid soaring consumer prices. Shares closed 7.6 per cent lower. Two months ago, the company said earnings per share would only dip about 1 per cent, while in February, it had predicted a modest increase.
The news rattled Wall Street across the board, warning the latest sign that inflation is hurting American consumers’ spending power.
The family’s late patriarch, Sam Walton, built the business around a discount culture that has in the past helped buy its stock during recessionary times. In reviewing its outlook, Walmart cited the cost of reducing merchandise stockpiles that customers were increasingly reluctant to buy as inflation hits a four-decade high.
Walton’s three surviving children, Alice, Jim and Rob, daughter-in-law Christy and Christy’s son, Lukas, own just under half of the retailer. That gives them a combined net worth of about $US198 billion, according to the Bloomberg Billionaires Index, down 11 per cent since the first of the year.
Walmart wasn’t the only retailer to see its shares tumble. Canadian e-commerce firm Shopify fell 14 per cent after chief executive officer Tobi Lutke acknowledged the company’s decision to expand rapidly coming out of the COVID-19 pandemic didn’t pay off. As a result, the firm said it planned to cut about 10 per cent of its workforce.
“We bet that the channel mix – the share of dollars that travel through e-commerce rather than physical retail – would permanently leap ahead by five or even 10 years” because of the pandemic, Lutke wrote.
“It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point.”