Walmart WMT-N delivered another quarter of impressive sales as speedy deliveries and low prices served as a magnet for shoppers across the income spectrum.
Yet like other major retailers posting financial results this week, it was cautious about the rest of the year given the current economic uncertainty. On Thursday, it issued a forecast for the current quarter that was weaker than what Wall Street had been expecting.
Walmart has resonated with many Americans who are increasingly careful about where they spend their money as inflation has taken a bigger bite out of paychecks, particularly since the start of the Iran war in late February. Traffic at Walmart can be a barometer of consumer spending given its vast customer base. More than 150 million customers are on its website or in its stores every week, according to Walmart.
Walmart’s promise of lower prices, improved merchandise and faster delivery has broadened its base to include wealthier shoppers, with the biggest gains in market share coming from households with annual income over US$100,000. That development is taking place as lower-income shoppers become more entrenched in what economists call a K-shaped economy.
“Our results reflect our continued focus on delivering across the enterprise – better shopping experiences, a broader assortment, and faster delivery,” CEO John Furner said in a statement Thursday.
Yet U.S. retailers have spent months navigating an uncertain economic environment, first with President Donald Trump’s tariffs, and now the impact soaring gasoline prices due to the war. The average price for a gallon of regular gasoline has raced higher this week, and did so again overnight. Gasoline prices are 40-per-cent above where they were at this time last year.
Based on early reports from retailers including Target TGT-N and Home Depot HD-N, shoppers are cautious but still spending, helped by more generous tax refunds, economists said. Yet there is a widespread belief that once of those benefits dry up, shoppers will pull back their buying
Target reported the largest jump in comparable sales in four years Wednesday, but a cautious outlook overshadowed convincing evidence that changes under the company’s new CEO are resonating with customers. Target raised its annual revenue outlook, but the upgraded sales expectations were still below the pace of the first quarter given so much economic uncertainty.
The nation’s two largest home improvement retailers Home Depot and Lowe’s LOW-N this week reported a sales lift from professionals and also homeowners stocking up on spring supplies. But executives from both companies said that customers are still holding back on larger discretionary home projects.
“I think, overall, this has been the most difficult housing market that that I’ve faced in this business since the financial crisis, ” Lowe’s CEO Marvin Ellison told analysts on Wednesday.
Walmart, based in Bentonville, Arkansas reported first-quarter earnings of US$5.33-billion, or 67 US cents for the quarter ended April 30. Adjusted per-share results were 66 US cents, matching the 66 US cents that analysts expected, according to FactSet.
For the year-ago quarter, the company reported net income of US$4.48-billion, or 56 US cents per share.
Sales rose 7.3 per cent to US$177.75-billion in the fiscal first quarter, above the US$174.84-billion that analysts predicted,
Comparable sales at U.S. Walmart stores, including online sales, rose 4.1 per cent during the three-month period ended April 30. That’s below the 4.6-per-cent gain in the fourth quarter.
The company said Thursday that consumers are feeling some economic pressure, but sales strength has persisted and it saw one of its strongest quarters of market share gains.
For the second quarter, Walmart expects sales will be 4-to-5-per-cent higher than the same period a year ago. That brings the range to between US$182.8-billion and US$184.59-billion. It also expects per-share profit to be between 72 US cents and 74 US cents. Analysts had been projecting per-share earns of 75 US cents on sales of US$186.2-billion, according to FactSet.
For the year, Walmart stuck to the guidance it issued in February of per-share earnings between US$2.75 and US$2.85, and an increase in sales of between 3.5 per cent and 4.5 per cent, or between US$731.1-billion and US$738.2-billion.
Wall Street has been anticipating profits of US$2.92 per share on sales of US$749.01-billion for the year.