Walmart just lowered its business outlook for the second quarter, citing inflation and an inventory surplus.

The big-box retailer on Monday said it expects Q2 adjusted earnings per share for the second quarter and full year to decline around 8% to 9% and 11% to 13%, respectively. Walmart expects comp sales for Walmart U.S., excluding fuel, to be about 6% for the second quarter as consumers purchase more food. This is up from the company’s previously outlined expectations.

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Walmart shares dropped almost 8% as of market open on Tuesday morning, prompting a drop in other retail stocks as well. Shares of Target, Kohl’s and Macy’s were also down. The Dow Jones Industrial Average fell by more than 30 points, or 0.3% and the S&P 500 dropped more than 0.4%.

The lowered guidance comes after consumer prices surged by 9.1% in June compared to a year ago, representing the largest 12-month increase since the period ending November 1981. Food prices were up 10.4%. According to Walmart, the increase in food prices impacted customers’ ability to spend on other categories, which led to more markdowns to help clear out excess inventory, especially apparel.

Walmart said it made some progress clearing inventory and managing price shifts in Q2. But the company still expects pressure in general merchandise categories to persist.

“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,” said Walmart CEO and president Doug McMillon in a statement. “We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.”

Walmart previously missed earnings expectations for Q1, reporting adjusted earnings per share of $1.30 compared to an expected $1.48. The company beat sales expectations with reported revenues of $141.57 billion compared to the $138.94 billion expected from analysts.

Walmart is set to report results for the second quarter on Aug. 16.

Walmart is not alone in its inventory issues this quarter. Higher than usual inventories due to shifting spending habits amid inflation has also been a major problem for other retailers. Executives from Target, Foot Locker, Macy’s and more said last quarter that they expect to see a surge in discounts as they look to correct their large levels of inventory.

Target last month also cut its guidance for Q2 as it rolls out a plan to shed its excess inventory with additional markdowns. Sales slowed in categories such as home, electronics, sporting goods and apparel as consumers spent more across essential categories like food and beverage.

Macro-effects in the current economic environment such as inflation, lack of stimulus funds and recession fears, are likely to punctuate earnings reports this quarter. In the next two weeks, Skechers, Steve Madden, VF Corporation, Deckers, Under Armour, Crocs and Adidas will report earnings for their most recent quarters.