More wealthy shoppers flocked to Walmart, helping the nation’s largest retailer overcome inflation headwinds faced by its rivals and deliver better-than-expected quarterly results, the company said Thursday.
Walmart said total U.S. comparable sales increased 3.8% in the first quarter ended April 30, with most of the increase coming from households with incomes of $100,000 or more.
“We’re seeing customers trade into Walmart,” Chief Financial Officer John David Rainey told Bloomberg.
“Historically, we have been thought about value, and now we are about value, quality and convenience.”
The average charge at the register remained flat, but the number of transactions increased.
Analysts had expected sales to rise 3.15%, according to LSEG.
Wealthy customers also boosted online sales for retailers, accounting for much of the 22% jump in e-commerce sales in the quarter, the company said.
The Bentonville, Arkansas-based giant raised its full-year forecast, sending its shares soaring 6.5%.
Growth was driven by pickup and delivery services and increased sales of men’s, women’s and children’s clothing through third-party marketplaces, which now offer more than 420 million products, primarily discretionary items. has been done.
“This is not an inflation-driven performance,” Chief Executive Doug McMillon said on an earnings call.
He said the company will continue to grow “regardless of whether the environment is inflationary or deflationary, whether customers have more or less money, as long as the products, prices and services we offer are successful.” Ta.
Overall U.S. retail sales were flat in April compared to the previous month, but inflation appears to be starting to lose momentum.
The consumer price index, which measures the cost of goods and services, rose 3.4% in April from a year earlier, slowing from the previous month’s 3.5% rise and in line with economists’ forecasts.
The question is whether retailers can retain these new customers as inflation eases, said Brian Yarbrough, an analyst at Edward Jones.
“Historically, Walmart has been unable to retain products after recessions have ended, but this time may be different as they have improved delivery speeds and access to better products on the market. ”
Americans have largely weathered the rise in prices, but there are concerns that prolonged inflation could put more pressure on low-income consumers and slow the anticipated recovery in consumption. is occurring.
Walmart executives said lower-income consumers maintained their spending habits this quarter, but they tended to prioritize cheaper items.
It also noted that the price gap between in-home and outdoor dining has widened, leading to an increase in the grocery business, which accounts for about 60% of total revenue.
A 45% increase in April in the number of food and consumable items the company offers at discounts it calls rollbacks has been a big hit with shoppers.
“By continuing to work closely with our suppliers to reduce costs, we are managing competitive price differentials and customers are responding favorably,” said John David Rainey, Walmart’s chief financial officer. “As a result, this has led to sustainable sales growth and improved gross profit margins.”
Yarbrough said Walmart also likely gained market share at the expense of rival Target.
Backlash against the company over its LGBTQ-themed products caused the company to post its first quarterly loss in six years in August.
Target will move most of its LGTBQ merchandise online this month in honor of June Pride, Bloomberg reports.
Despite strong earnings, Walmart this week cut hundreds of jobs at its corporate headquarters as it renovates its Bentonville campus, asked remote workers to return to the office and reduced most offices to three. announced that it would be integrated into the
