Walmart stock sinks after company slashes guidance

Yahoo Finance's Brian Sozzi joins the Live show to look at Walmart's sliding stock after cutting forward guidance and profit forecasts.

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SEANA SMITH: Walmart shares off just about 7 and 1/2% with just under 10 minutes to go in the trading day. The company is slashing its second quarter and full year profit guidance. Now expects its annual profits to fall to up to 13%. They were initially looking for a 1% drop. Yahoo Finance's Brian Sozzi is here to break this down. And Brian, initially, we were thinking Walmart would actually be OK in the face of inflation, but they're falling victim to this as well.

BRIAN SOZZI: Yeah, this quarter from Walmart got me so hot and bothered, I just take off the suit. And--

SEANA SMITH: I like it.

BRIAN SOZZI: --you're getting my Lululemon clothes.

DAVE BRIGGS: Rolling up the sleeves.

BRIAN SOZZI: I know you talked about Lululemon last Friday.

SEANA SMITH: And the real Sozz.

BRIAN SOZZI: Yes, but look, this quarter wasn't good. The stock is probably going to end close to the lows of the session. Not really seeing anyone on the Street come out here and say, you know what? Sell all your crypto holdings. Go out and buy Walmart stock on the dip. Not getting that.

In fact, here's what some analysts are, in fact, saying. Jefferies retail analyst Stephanie Winston talked to us in the morning, saying, these results by Walmart humanize the consumer. Seeing some weakness in the low income shopper, the middle income shopper, and then even the high income shopper. So this notion that Walmart just caters to low income, I think, getting completely tossed in the trash here today.

Next up, Greg Melich over at Evercore ISI has seemingly been covering Walmart for 97 years, talking about how Walmart might have to take deeper pricing actions to cut inventory. So what does that mean? That means likely more gross profit margin pressure for Walmart, potentially another warning when Walmart reports earnings in mid-August. And as from a consumer standpoint, you probably walk into a Walmart store and start to see deeper discounts than are in there right now.

DAVE BRIGGS: See, we're talking about the positive side of that.

SEANA SMITH: Yeah, I like it.

DAVE BRIGGS: No surprise to see Target, Kohl's, and Macy's down. It was a bit of a surprise to see Nordstrom get hit hard on the heels of this. But is there another positive side to this? And I know I'm reaching here. Is this a deflationary story, good news for the Fed that their job is working?

BRIAN SOZZI: I said this morning, and I'll say it again, be careful what you wish for. And I know maybe the market is not selling off as much on a Walmart warning because of this view, bad news equals good news for the markets. Maybe the Fed comes out tomorrow, doesn't sound as hawkish.

Saw a story by Nick Timiraos on the Journal hit this afternoon suggesting that as much, too. But you don't want to root against the US consumer. You don't want to see bad news from a Walmart. You don't want to see that consumer saying, hey, you know what? I can't afford $5 meat from Walmart's freezer section because of inflation. I mean, this is bad news. It's a bad signal across the board.