Walmart Has Had 1987 Black Monday Flashbacks 11 Times So Far: Here's What Happened Next

Shares of superstore chain Walmart Inc WMT had their largest one-day slump ever on Friday, October 16, 1987, the trading day before "Black Monday," plummeting 11.7%.

Looking back, the stock has gapped down more than 7% in a single day on 11 occasions since 1985, and Tuesday marks the second time this year.

Consumer directory stocks took a beating on Tuesday, led by Walmart’s near 9% gap-down after the retail behemoth lowered its Q2 and full-year profit forecasts, stating that while it is drawing in customers, the cost of food and transportation is eating into their spending. This is causing markdowns on other products.

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Bespoke Investment Group took to Twitter Inc TWTR to remind users that Walmart has been in this position before, “At 9% or more, tomorrow's gap down in Walmart would be the steepest since Black Monday (10/19/87).”

CEO Doug McMillion aimed to shed light on what happened with Walmart’s dismal quarter and weak outlook, saying, "The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars," McMillon said. "We’re now anticipating more pressure on general merchandise in the back half."

On the heels of this news, equity researchers at Well Fargo & Co WFC reduced its 2022 and 2023 EPS estimates to $5.67 (from $6.35) and $6.60 (from $6.85), respectively, saying “WMT confirmed investor's biggest fear after the Q1 guide down; it didn't cut deep enough to reflect the risk associated with its excess inventory position and a slowing consumer.”

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Walmart presented its projection as part of a larger issue of increased costs for necessities affecting other categories. It should be noted that this is a reference to the problems with the inventory mix that Target Corporation TGT foresaw at the beginning of June.

Price action: Shares of Walmart fell 8.23% to $121.16 at the time of writing on Tuesday, according to data from Benzinga Pro.

Photo: Courtesy of Mike Mozart on flickr