NEW YORK (AP) — Walmart exceeded expectations with strong sales, driven by its low prices that attract millions facing rising costs in housing and groceries, among other things.
The nation’s largest retailer also raised its full-year outlook, showing confidence in its business model. Walmart executives noted that while consumers might still be looking for deals, there are no signs of weakening among their customers.
“So far, we aren’t seeing an overall weaker consumer,” CEO Doug McMillon told industry analysts on Thursday. This resilience is evident across the retail sector.
Shares surged nearly 7% on Thursday.
Americans increased their retail spending last month by the largest amount in a year and a half, alleviating concerns that the Federal Reserve’s efforts to curb spending through higher interest rates may have gone too far and harmed the consumer, a key driver of the U.S. economy.
Walmart, headquartered in Bentonville, Arkansas, is one of the first major U.S. retailers to report quarterly results, offering insight into the spending behaviors of Americans.
Despite a surprising decline in July hiring and a rising unemployment rate due to higher interest rates affecting businesses and households, the strong U.S. economy has supported global economic growth, giving Americans the financial means to keep spending.
Economic indicators suggest a more favorable environment for retailers.
Inflation reached its lowest level in over three years last month, hinting that the worst price surges in four decades are fading, potentially setting the stage for an interest rate cut by the Federal Reserve in September.
Walmart Inc. reported earnings of $4.5 billion, or 56 cents per share, for the quarter ending July 31, exceeding Wall Street’s expectations. Sales increased nearly 4.8% to $169.33 billion.
Comparable store sales in the U.S. rose 4.2%, and global e-commerce sales increased by 21%.
Walmart observed higher transaction volumes and average customer spending compared to the same period last year.
In a positive shift, sales of discretionary items like clothing remained steady or slightly positive, indicating consumer confidence. Walmart credited deflation in general merchandise and improved merchandise for this improvement.
Walmart launched its largest store-label food brand in 20 years, aiming to attract younger consumers seeking to cut their grocery bills.
Walmart has increased discounts to combat high grocery prices, rolling back prices by 35% in the most recent quarter.
The retailer rebranded its 30-year-old “No Boundaries” clothing brand to cater to Gen Z customers, part of a strategy to position itself as a destination for fashionable clothing as well as groceries.
Walmart raised its earnings per share and sales outlook for the year, reflecting its strong performance and consumer confidence.
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