Walmart grows more optimistic about 2024 as bargains prove a powerful lure for the inflation weary (2024)

NEW YORK (AP) — Walmart had another quarter of strong sales that topped almost all expectations with its comparatively low prices proving a powerful draw for millions who have struggled with rising costs for housing, groceries and almost everything else.

The nation’s largest retailer raised its full-year outlook and executives said their customers may still be holding out for deals, but they’re not seeing any signs that they’re fraying.

“So far, we aren’t experiencing a weaker consumer overall,” CEO Doug McMillon told industry analysts Thursday.

Evidence of a resilient U.S. consumer is apparent across the entire retail sector.

The U.S. reported Thursday that Americans stepped up their retail spending last month in the largest leap in a year and a half. At least on Thursday, that helped ease concerns that a sustained campaign by the U.S. Federal Reserve to cool spending with higher interest rates may have gone to far and damaged the main driver of the U.S. economy, the consumer.

Walmart is among the first major U.S. retailers to report quarterly results and provides a peek into how Americans are feeling about their spending power, which came into question recently after hiring by U.S. employers fell surprisingly hard in July and the unemployment rate rose for the fourth straight month. The strong U.S. economy has been a main driver of global economic growth and the U.S. jobs market has given Americans the financial wherewithal to keep spending.

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Yet the July hiring data that shook markets has been repeatedly offset by broader economic trends pointing to a steadily improving environment for both consumers and retailers.

The Labor Department said Wednesday that year-over-year inflation last month reached its lowest level in more than three years, another hint that the worst price spikes in four decades are fading and setting up the Federal Reserve for an interest rate cut in September. That doesn’t mean prices overall are falling, but wages and the cost of living appear to be coming more inline after the pandemic skewed the economy.

Walmart Inc. reported earnings of $4.5 billion, or 56 cents per share, in the three months ended July 31. That compares with $7.9 billion, or 97 cents per share, in the same period last year when it booked big investment gains. Adjusted per share earnings were 67 cents, or 2 cents better than Wall Street had expected, according to FactSet.

Sales rose nearly 4.8% to reach $169.33 billion, also beating expectations.

Comparable store sales — which include online and stores open for the past 12 months — rose 4.2% in the U.S. That compares with 3.8% in the first quarter, and 4%, in the fourth quarter

Global e-commerce sales rose 21%, matching the first quarter’s pace.

The number of transactions and the average amount customers spent during each of those transactions at Walmart was higher in this quarter than it was during the same three months last year.

And in a potentially encouraging shift, Walmart said sales of discretionary items like clothing were flat to very slightly positive. Americans for two years have maintained a laser-like focus on the essentials, taking a pass on goods that are not absolutely necessary, and spending that money instead on groceries and other basics.

John David Rainey, Walmart’s chief financial officer, told The Associated Press in a phone interview that the improvement was a result of several factors: deflationary prices in general merchandise, which helped attract more shoppers, and improved offerings on the shelf from Walmart. Rainey cautioned that shoppers are still choosy and they’re gravitating more toward store label goods and waiting for sales.

In July, 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 are seeking to cut their grocery bills. Walmart said it expects to have a total of 300 products under the Bettergoods label by the fall, ranging from frozen foods to coffee and chocolate.

Grocery prices, however, have remained stubbornly high, Rainey said.

Walmart has stepped up discounts and during the most recent quarter it had 7,200 price rollbacks, a 35% increase.

For back-to-school, Walmart retooled its 30-year-old brand called No Boundaries. to cater to Gen Z customers. The retooling of the No Boundaries label is part of a strategy to get customers to think of Walmart as a place to buy cool clothes, along with groceries.

For the year, Walmart said it now expects earnings per share to be in the range of $2.35 to $2.43. That’s up from its previous estimate of $2.23 per share to $2.37 per share. Analysts projected $2.44 per share, according to FactSet.

The retailer is projecting annual sales to be up anywhere from 3.75% to 4.75%. It had previously expected sales would rise 3% to 4%.

Shares of Walmart Inc., based in Bentonville, Arkansas, jumped 7% Thursday.

Walmart grows more optimistic about 2024 as bargains prove a powerful lure for the inflation weary (2024)

FAQs

Walmart grows more optimistic about 2024 as bargains prove a powerful lure for the inflation weary? ›

John David Rainey, Walmart's chief financial officer, told The Associated Press in a phone interview that the improvement was a result of several factors: deflationary prices in general merchandise, which helped attract more shoppers, and improved offerings on the shelf from Walmart.

What changes are coming to Walmart in 2024? ›

Here are nine major changes you will see at Walmart this year.
  • New digital shelf labels.
  • Expanded In-Home delivery.
  • Expanded drone delivery.
  • AI personal shopping assistant.
  • A new line of trendy, low-cost groceries.
  • Store closures.
  • Walmart Health closures.
  • New on-demand early morning delivery services.
Jun 18, 2024

Why is Walmart bad for the economy? ›

The presence of a Walmart store can hurt the business of smaller companies and lower wages for local workers. Much of the Walmart Effect can be attributed to Walmart's immense buying power. The Walmart Effect can also affect suppliers, who must drive their production costs down in order to afford to sell to Walmart.

What is replacing workers at Walmart? ›

Walmart's Using More Robots — But Says They'll Actually Extend Warehouse Workers' Careers Walmart executives say new retrieval robots make some warehouse work "less manual-intensive."

Is Walmart changing their name? ›

Most of us, and I'd guess all our customers, refer to our company as Walmart and still will. Changing our corporate name from Wal-Mart Stores, Inc., to Walmart Inc. is just a symbol of how customers are shopping us today and how they'll increasingly shop us in the future.

What is Walmart's biggest issue? ›

Critics say that Walmart's lower prices draw customers away from smaller Main Street businesses, hurting local small town communities, and that the company hurts the United States economy by relying excessively on Chinese-produced products – Walmart is the largest importer in the United States in many categories, such ...

Is Walmart struggling financially? ›

The retail giant topped Wall Street's earnings and revenue forecasts in the first quarter, reporting adjusted earnings per share of $0.60, compared with the expected $0.52, and revenue of $161.5 billion, surpassing the forecasted $159.5 billion.

Is Walmart still a bad company? ›

Wal-Mart is consistently listed among America's most admired companies by Fortune magazine. At the same time, it is frequently the target of criticism for its employment practices and its effect on the larger economy and community.

What is the potential future of Walmart? ›

Future Growth

Walmart is forecast to grow earnings and revenue by 11.7% and 4% per annum respectively. EPS is expected to grow by 13.2% per annum. Return on equity is forecast to be 21.4% in 3 years.

What is the new Walmart effect? ›

The new Wal-Mart effect occurs when a mix of social, economic, and legal factors induces a firm to impose on its suppliers private environmental or other requirements that are traditionally the subject of government regulation.

What is the new bonus structure at Walmart? ›

For example, under the new bonus plan a full-time worker who's been with Walmart between one year and almost five years can earn an extra $350 per year, while a 20-year full-time worker can earn a maximum bonus of $1,000, Walmart said. The plan will be available to 700,000 U.S. workers, the company said.

What is the goal of Walmart 2025? ›

By 2025, we aim to achieve a 15% absolute reduction in our total virgin plastic use as compared to the 2020 baseline.

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