NEW YORK (AP) — Walmart Inc. reported another quarter of strong results Thursday as its low prices pull in shoppers scouring for discounts with inflation stubbornly high.
The nation’s largest retailer, based in Bentonville, Arkansas, also offered an upbeat outlook. Share rose more than 6% in early afternoon trading.
Walmart, based in Bentonville, Arkansas, is among the first major U.S. retailers to report quarterly results that could shed more insight into how consumers are feeling, particularly after the government reported an unexpected flattening of spending between March and April.
Americans have remained largely resilient in the face of inflation, bolstered by a strong labor market and steady wages. But there are signs that shoppers are pulling back under the growing weight of higher prices and the higher costs of carrying debt. While the inflation rate has ebbed prices remain elevated for some basic items like packaged goods and rents remain high, sapping the spending power of millions of people.
Walmart said its customers are spending more on necessities while cutting back on discretionary goods like home furnishings and electronics. The retailer is also noticing that shoppers are looking for food storage items as they focus on eating at home to save money. And they’re shifting more to private brands over national brands, which tend to be more expensive.
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To cater to price sensitive shoppers, the retailer is coming out with more price rollbacks — temporary price cuts — and that is keeping store traffic and sales strong.
“Our combination of everyday low prices plus a large number of rollbacks is resonating,” CEO Doug McMillon told investors on a call Thursday.
Walmart is also drawing households with income exceeding $100,000 a year as it focuses on convenient and faster ways to shop, and it upgrades the quality of its items. Two-thirds of Walmart’s market share gains across the aisles are coming from that group, Walmart said.
At Walmart U.S.'s division, over the past 12 months 4.4 billion items were delivered on the same or next day, with about 20% of those delivered in under three hours, McMillon said. He noted on the call that delivery times are getting faster and the cost of delivery for Walmart is coming down.
Meanwhile, Home Depot, the nation’s largest home improvement retailer, said this week that sales declined for the third consecutive quarter to start 2024 as homeowners and prospective buyers wrestled with higher mortgage rates and inflation.
Starbucks last month lowered its sales expectations for the year as visits to its coffee shops slow worldwide. The decline in spending at U.S. stores was even worse than it had anticipated.
Walmart has launched new initiatives as it faces increasing pressure to rev up sales with Amazon becoming a growing threat.
This month, Walmart launched its biggest store-label food brand in 20 years in terms of the breadth of items, hoping to reach younger customers who are not loyal to grocery brands and want foods that are more affordably priced.
The brand, called Bettergoods, is just hitting Walmart stores and the company’s online shopping site. Walmart said it expects to have a total of 300 products by the fall ranging from frozen foods and dairy, to coffee and chocolate.
Walmart also announced in February it was buying smart TV maker Vizio for $2.3 billion to boost its advertising business. The deal gives Walmart access to Vizio’s SmartCast operating system, which will allow Walmart to offer its suppliers the ability to display ads on streaming devices.
But Walmart is scaling back in areas where it has not done well and said last month that it would close its health centers and virtual care service.
Walmart reported profits of $5.10 billion, or 63 cents per share for the quarter ended April 30. That compares with $1.67 billion, or 21 cents per share, in the same period last year. Adjusted earnings per share was 60 cents, far surpassing estimates for 53 cents per share, according to FactSet analysts.
Revenue rose 6% to $161.51 billion in the quarter, up from $152.3 billion in the year-ago quarter. Analysts expected $159.6 billion, according to FactSet.
Comparable store sales — those from established stores and online operating over the past 12 months — rose 3.8% at Walmart’s U.S. stores, a bit slower than the 4%, in the fourth quarter. The metric rose 4.9% in the fiscal third quarter. Global e-commerce sales were up 21% in the latest quarter, fueled by its online delivery services and third-party marketplace. That’s compared with 23% during the fourth quarter and 15% in the previous quarter.
The average ticket— how much shoppers spent per trip — was unchanged in the latest quarter from a year ago, even as the number of transactions rose 3.8%.
Walmart’s Chief Financial Officer John David Rainey told The Associated Press on a call Thursday said that prices of such items as avocados, grapes and ground meat still remain high, but there’s been deflation in other items like eggs.
Walmart said it expects sales for the current year to be at the high end or slightly above the company’s prior guidance of 3% to 4%. It also expects adjusted profit per share to be at the high end or slightly above its prior projection of $2.23 to $2.37.
Walmart’s shares rose $3.48 to $63.31 in early afternoon trading.
