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The Real Reason Walmart And Sam's Club Are Struggling Financially
Walmart and Target were among the few businesses that thrived at the beginning of the coronavirus pandemic in 2020. Today, however, stores like Walmart and Sam’s Club face historic inflation and struggle to keep profits where they once were.
Inflation is higher than it has ever been in the past 40 years, and everyday consumers and huge corporations alike are feeling the effects. On Tuesday, May 17, Walmart reported that first-quarter profits decreased by 24% compared to last year, via Northwest Arkansas Democrat-Gazette.
This is not because of a decrease in sales but due to increased costs in other areas, like employee wages. Walmart faced a surplus of staff as employees on leave for the pandemic returned to work early, overlapping with the staff that was hired to cover for them.
With customers paying more for groceries and fuel, the department store saw a decrease in sales of "general merchandise," which is more profitable than the grocery sector. The last major factor in the decline in profits is the skyrocketing fuel prices. According to Brian Yarbrough of the firm Edward Jones said, “inflation needs to come down," as, “the lower-income families can't afford the general merchandise."