(Reuters) -Walmart Inc reduced its full-year profit outlook on Tuesday. This was a further blow to the profit margins of the retailer giant due to surging fuel and labor costs.

In premarket trading, the shares dropped 6.5% and fell to $138.51

Walmart (NYSE) is doing better than its competitors in keeping inventory levels. This can be attributed to Walmart’s massive size and negotiation power with suppliers. However, costs have skyrocketed as Walmart expedites shipments and charters cargo ships to ensure that products are on shelves.

Walmart reported that the increase in wages caused operating expenses to rise by 45 basis point in the first quarter.

The net income attributable the company plummeted to close to 25%, to $2.05 Billion in the three-months ended April 30,

Doug McMillon, chief executive officer, said that the “U.S. Inflation levels,” especially for fuel and food, had put greater pressure on margins and operating costs than they expected.

It said that fiscal 2023 earnings per stock will be down about 1% from its earlier forecast of a slight increase.

Walmart also reduced its second-quarter earnings forecasts. Walmart now expects earnings per share will be slightly flat or up, as opposed to its previous prediction of an increase in the low- to mid-single figures.

The total revenue increased 2.4% to $141.57billion, surpassing analysts’ average estimate $138.94billion, according to IBES data by Refinitiv.

Placer.ai data shows that Walmart averaged a 4.9% monthly increase in visits between 2022 and 2021. Its refusal to raise prices brought in more price-conscious customers feeling the pain of inflation.