It will take Walmart a little more than two quarters to reduce the backlog

Bloomberg — Walmart said it needed another two quarters or so to overcome the overstocking that drove price cuts and contributed to a sharp drop in stocks last month.

About a fifth of the 32% increase in inventories in the last quarter was due to merchandise being stockpiled faster than the company wanted, said John Woerner, Walmart’s chief of US operations. Another part of the increase was due to the restocking of much needed products after disruptions in the supply chain last year caused an increase in out-of-stock items.

“It’s likely to be another two quarters until we get to where we want to reduce inventory,” Woerner told financial analysts Friday after the annual staff meeting in Fayetteville, Arkansas.

This was the first time Furner and CEO Doug McMillon had faced Wall Street since Walmart Lowering its profit prospects on May 17, which led to the largest one-day decline in stocks since 1987. McMillon said Friday that the retailer is trying to cut costs while working with suppliers to limit price hikes.

The CEO said managing inventory is part of that effort, as the company spent more on warehousing costs in the first quarter of the fiscal year, which ended in late April.

McMillon said he was concerned about the damage high inflation could do to American households, especially if price increases remain elevated in the coming months.

To mitigate the impact on households and compete with dollar stores, he said Walmart plans to limit price hikes for staples such as canned tuna, macaroni and cheese.