The Home Depot, Inc. (HD) stock is trending today as it fell over 1.9% pre-market. Investors are responding in sympathy with Walmart.

Walmart provided a business update and revised its outlook for profit for the second-quarter and full-year, primarily due to pricing actions aimed to improve inventory levels at Walmart and Sam’s Club in the U.S. and mix of sales.

These were some of the highlights:

— Company lowers profit outlook for Q2 and FY23

— Operating margin is expected to be about 4.2% for Q2 and 3.8% to 3.9% for FY23

— Outlook for net sales higher for FY23 given Q2 results, elevated by inflation

The comp sales for Walmart U.S., excluding fuel, are expected to be about 6% for the second quarter. And this is higher than previously expected with a heavier mix of food and consumables, which is negatively affecting the gross margin rate. Food inflation is double digits and higher than at the end of Q1.

This is affecting customers’ ability to spend on general merchandise categories and requiring more markdowns to move through the inventory, particularly apparel. During the quarter, Walmart made progress in reducing inventory, managing prices to reflect certain supply chain costs and inflation, and reducing storage costs associated with a backlog of shipping containers.

Based on the current environment and the company’s outlook for the remainder of the year, Walmart is providing the following updates to its guidance.

— Consolidated net sales growth for the second quarter and full year is expected to be about 7.5% and 4.5%, respectively. Excluding divestitures, consolidated net sales growth for the full year is expected to be about 5.5%.

— Net sales include a headwind from currency of about $1 billion in the second quarter. Based on current exchange rates, the company expects a $1.8 billion headwind in the second half of the year.

— The company maintains its expectations for Walmart U.S. comp sales growth, excluding fuel, of about 3% in the back half of the year.

— Operating income for the second quarter and full-year is expected to decline 13 to 14% and 11 to 13%, respectively. Excluding divestitures, operating income for the full year is expected to decline by 10 to 12%.

— Adjusted earnings per share for the second quarter and full year is expected to decline around 8 to 9% and 11 to 13%, respectively. Excluding divestitures, adjusted earnings per share for the full year is expected to decline 10 to 12%.

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