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Walmart Inc cut its full-year profit forecast on Tuesday, signaling a bigger knock to the retail giant’s profit margins from surging costs of everything from fuel to labor.

Shares tumbled 6.5% to $138.51 in premarket trading, dragging down those of rival retailers including Target Corp.

Walmart has fared better than most rivals in maintaining inventory levels due to its massive scale and negotiating power with suppliers, but costs have soared as it expedited shipments and chartered cargo ships to get products on shelves.

Inventories jumped 32% to $61.2 billion in the first quarter, exacerbated in part by fewer purchases of patio furniture, apparel and landscaping supplies due to cooler weather.

Meanwhile, higher wage investments and a rapid return of employees from COVID leave led to excess staffing, causing operating expenses to rise by 45 basis points as a percentage of net sales in the quarter, Walmart said.

These pressures reduced net profit by a quarter to $2.05 billion for the three months ended April 30.

Chief Executive Doug McMillon said the retailer’s quarterly profit “reflect the unusual environment”, at a time when U.S. inflation is at a nearly four-decade high.

The company estimates fiscal 2023 earnings per share to fall about 1%, compared to its previous forecast of a mid-single digit increase.

Walmart also tempered its second-quarter expectations, with earnings per share now expected to be flat to up slightly, compared to a low to mid-single digit increase previously.

First-quarter earnings of $1.30 per share missed analysts’ average estimate by 18 cents. This marked Walmart’s first quarterly profit miss in five quarters.

Total revenue for the quarter rose 2.4% to $141.57 billion due to higher sales of food and health and wellness products, beating analysts’ average estimate of $138.94 billion, according to IBES data from Refinitiv.

Walmart has averaged a 4.9% increase in monthly visits since the start of 2022 compared to the same period in 2021, Placer.ai data showed, as its resistance to raising prices pulled in more price-conscious shoppers feeling the strain of persistent inflation.

However, comparable transactions at its U.S. business remained flat from a year earlier. “Overall, Walmart is in a solid place,” Neil Saunders, managing director of GlobalData said.

“However, it is now entering a much leaner period where the absolute necessity of maintaining a low-price proposition will likely mean that profitability and margins come under increasing pressure.”

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