With their market capitalization shrinking significantly, are American retail giants also having a hard time?

According to Global   According to the latest data from Data, the cumulative valuation of the world's TOP25 retailers ranked by market value fell by 19.4% in the second quarter of 2022 , with losses reaching US$535 billion , among which the valuation loss of US retailers exceeded 65%.

The data also pointed out that the six major US retail giants, including Amazon, Walmart, Home Depot, Nike, Costco and Target, suffered huge losses , each losing more than US$25 billion in market value .

This year, inflation has remained high and the consumer financial crisis has continued. The United States has announced interest rate hikes several times, and just this month, the Federal Reserve further raised interest rates by 75 basis points.

Global Data Company   Data said that multiple interest rate hikes will affect the US economic growth forecast for 2022 , and its forecast for the US inflation rate in 2022 has also been raised from 4.9% in February to 7.7% in July .

Currently, rising commodity prices due to inflation have led to a shift in consumer behavior . In the United States, consumers have concentrated their economic spending on necessities such as food and fuel , and demand for non-essential items such as electronics and clothing has dropped significantly , causing a huge change in market dynamics and slowing down the retail industry .

Global   Ragupathy, Business Infrastructure Analyst at Data   Jayaraman said that due to the pandemic lockdown in the past two years, e-commerce has ushered in a development boom, and retailers have also fully deployed online businesses . The e -commerce market for categories such as home decoration is in full swing . However, as consumers return to physical stores, online market share has been regained.

In addition, due to soaring inflationary pressures and the Federal Reserve's interest rate hikes , stocks were generally sold off in the second quarter , which led to a decline in the market value of retail giants.

It is understood that Amazon is the only retailer among the TOP25 retailers whose valuation loss exceeded US$100 billion in the second quarter .

Although Amazon "boosted" its e-commerce dividends from the peak of the epidemic , which significantly improved the performance of the company's stock in 2020 and 2021, inflationary pressures and market declines in 2022 have brought the company's stock back to pre-epidemic levels.

Amazon also reported its first quarterly loss in seven years in the first quarter of this year, while Walmart, Lowe's, Nike and Costco all reported market valuations down more than 20% compared with the same period last year .

Recently , due to weak consumer demand, following Walmart and Target , US retail giant Best Buy also announced a reduction in its full-year and second-quarter profit forecasts , and said, "It will continue to actively evaluate further actions to manage profitability."

Since Walmart announced a cut in its profit forecast, a number of U.S. retail stocks have collapsed .

However, Amazon announced its second- quarter results on the 28th local time , saying that net sales exceeded expectations. Boosted by this news, Amazon's stock rose 13.62% after the market that day and closed up 10.36% this week. Its market value increased by approximately US$ 129 billion in a single day , and Amazon founder Bezos' wealth increased by approximately US$ 12.8 billion in a single day .

It is reported that Amazon is one of the few US retail giants whose performance exceeded expectations. Previously, Target also lowered its profit forecast twice and said it would take active measures to remove excess inventory before the critical back-to-school and holiday seasons.

The inventory crisis is currently a stumbling block to profit growth for U.S. retailers . Walmart, Target and others are facing the problem of warehouse overflows due to excess inventory .

It is reported that several suppliers in the United States have stated that their net sales this year have declined compared with the previous year because retailers are reducing purchase orders.

Wells Fargo expects that promotions will increase throughout the summer as retailers clear excess inventory. At the same time, retailers' price cuts and promotions will bring greater competition to cross-border sellers, and it is difficult to predict how long their living space and profit margins in overseas markets will be squeezed.

USA

retail