Walmart's low price promise in focus after Amazon's warning
Aug 2 (Reuters) -Walmart's "Everyday Low Price" promise will be put to the test when it reports quarterly results, after rival Amazon.com's warning that customers had turned bargain hunters, pressuring the online shopping behemoth to forecast a weak current quarter.
Shares of Amazon sank nearly 9% in premarket trading on Friday, while Walmart's stock was marginally lower.
Major retailers including Target TGT.N, bellwether Walmart WMT.N and Kroger KR.N have been pushing to keep prices on essentials low as many Americans shun big ticket spending and turn to discount shopping in the face of sticky inflation.
Walmart, due to report second quarter results on Aug. 15, is expected to post a 4% rise in quarterly revenue. However, that is set to be its slowest rate of growth in nearly two years, according to LSEG data.
Amazon AMZN.O on Thursday reported slowing online sales growth in the second quarter and said consumers were seeking out cheaper options for purchases leading the online giant to forecast current quarter revenue below expectations.
"Consumers are being careful with their spend, trading down, looking for lower average selling price products, looking for deals. That continued into the second quarter, and we expect it to continue into the third quarter," Amazon CFO Brian Olsavsky said on a post-earnings call.
"(Amazon) Investors may stitch the second quarter retail margin stepdown together with the soft third quarter revenue guidance to create the narrative of worsening discounting needed to entice a softer consumer - and this is tough to disprove," RBC Capital markets analysts said in a note.
Results from major consumer packaged goods companies including Procter & Gamble PG.N and PepsiCo PEP.O also showed signs of a slowdown.
While P&G reported a surprise drop in quarterly sales, PepsiCo missed analysts' expectations.
The second quarter tends to be leaner for retailers, with sales ramping up in the second half of the year with back-to-school and holiday season demand.
Shares of Walmart and Amazon have outperformed the S&P 500 .SPX so far this year, rising 33% and 21% respectively, compared to the 14% gain in the broader index.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Nivedita Bhattacharjee
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