What: Walmart’s sales growth slowed in the first quarter, and the retailer’s U.S. operating income took a USD1 billion haircut. Comparable sales in the U.S. rose by 3% and were up 9% from 2020.

Why is it important: Inflation took a toll on the company’s top and bottom line, with fuel, container, storage, and other costs spiking. At the same time, customers pulled back spending on high-margin general merchandise to compensate for rising food prices.

Walmart’s Q1 is another sign that consumers are changing their purchases to adapt to inflation. Along with pulling back on general merchandise, which as a category fell by low single digits at Walmart U.S., to account for price hikes in grocery, executives said that customers were trading out name brands for lower-priced private labels.

 Walmart’s profits take a hit