New York (CNN Business) Many American shoppers have stopped buying clothes and other discretionary items as the highest rate of inflation in four decades strained their pockets.
That left Walmart (WMT) and other retailers stuck with lots of expensive clothes and items on their shelves. To help clear the backlog, Walmart is lowering prices on certain items and select products.
“High levels of food and fuel inflation are affecting how customers spend,” Walmart CEO Doug McMillon said in a press release on Monday. “Walmart clothing in the United States requires more discounted dollars.”
McMillon said the company expects a slowdown in customer spending on general merchandise in the second half of the year.
Walmart is the largest retailer in the United States, and its move may prompt competitors to lower prices in these areas.
While lower prices and discounts are good news for shoppers, they mean less profits for businesses. Apparel and general merchandise are more profitable for Walmart than groceries and consumer goods.
Walmart, in its announcement on Monday, lowered its earnings forecast for the second quarter and the rest of the year.
The company’s shares fell 9% during the trading period after the close. Shares of Amazon (AMZN), Target (TGT) and other retailers also tumbled in Walmart news.