Walmart Stock (NYSE:WMT) has withstood the storm in 2022. Its stock has been down 9% year to date, which is less than the S&P 500’s 23% decrease.
That, though, might change. The retailer may have thrown a significant clue, implying that it does not expect high demand this Christmas season.
Walmart is employing considerably fewer seasonal employees.
In September, Walmart will be employing 40,000 seasonal employees to aid with the forthcoming Christmas season. This contrasts sharply with the almost 150,000 jobs it created a year earlier. The corporation has said that part-time employees would be able to take up additional shifts, but this is still a significant decrease in personnel.
This might be troublesome for the store, given Walmart’s inventory levels remain high. Even with the discounts that will almost certainly ensue from attempting to unload all of that goods, Walmart still sees no need for a bigger pool of temporary, seasonal employees, which should raise a warning signal for investors. Since 2021, the quarterly inventory of Walmart has increased.
Other businesses are also providing warning signs.
Investors who are paying attention to other firms may detect similar warning signs. FedEx just revealed its latest profit figures, and the company’s CEO, Raj Subramaniam, had a bleak view for the near future. He predicted a worldwide recession, telling CNBC that “we’re seeing that volume fall in every industry throughout the globe.”
Another probable indicator of problems comes from Amazon, the online retailer and Walmart competitor, which will have a second Prime Day event in October.
Why Walmart Stock May Be in Jeopardy
According to data from Walmart, Amazon, and FedEx, the forecast for customer demand is not bright. And all of this might spell disaster for Walmart stock (NYSE:WMT). Due to a lack of significant demand, it may be forced to become more active in lowering its inventory, particularly older things that are still taking up space. This would further crimp its already thin margins.
Another factor that makes Walmart stock (NYSE:WMT) dangerous to own now is that it is trading at more than 26 times its trailing earnings. Target, another store battling comparable difficulties, is selling at only 17 times profits. With a bleaker outlook and perhaps worse growth and profit statistics, Walmart’s stock may be ready for a drop in the coming quarters. For those reasons, I’d avoid it for the time being.
Featured Image- Megapixl @ Noamfein