Business | Supermarket crash

Shares in America’s big retailers swoon

Rising costs catch up with Walmart and Target

Workers clear debris from a Walmart store parking lot following a tornado in Round Rock, Texas, U.S., on Tuesday, March 22, 2022. There were 22 reports of tornadoes, mainly across eastern Texas, as well as one in Oklahoma, according to the Storm Prediction Center. Photographer: Jordan Vonderhaar/Bloomberg via Getty Images

May 19th 2022

Walmart went from strength to strength during the covid-19 pandemic. Its years-long investments in online fulfilment finally began to pay off as virus-wary shoppers swapped aisles for apps. As inflation picked up initially, its “everyday low prices” looked even more appealing than usual. And investors appeared to believe that it had the power to make those prices a bit less low, passing its own rising costs without putting off shoppers or sacrificing margins.

On May 17th economic reality finally caught up with America’s supermarket titan. The company reported quarterly earnings that fell short of even the most conservative analysts’ estimates, blaming chiefly supply-chain snags and the rising cost of labour and transport. Its share price fell by 11%, a daily drop second only to the one the firm experienced in the trading session before the Black Monday stockmarket crash in 1987. A day later it slid by another 7%. The same day Target, another pandemic retail star, reported similarly disappointing results, wiping out 25% of its market value. The two companies shed a combined $65bn in market capitalisation in the space of two days.

This article appeared in the Business section of the print edition under the headline “Supermarket crash”