Walmart’s Robust First Quarter Driven by Bargain-Hunting Amidst Lingering Inflation Concerns

Walmart Stock

Walmart Inc. (NYSE:WMT) delivered another strong quarter, showcasing its resilience in attracting shoppers seeking value amidst persistent inflation. The retail giant, headquartered in Bentonville, Arkansas, also provided an optimistic outlook, leading to a more than 5% increase in premarket trading.

As one of the first major U.S. retailers to report quarterly results, Walmart’s performance sheds light on consumer sentiment, especially following the government’s report of a surprising spending plateau between March and April.

Despite inflation’s impact on prices, Americans have largely remained resilient due to a robust labor market and steady wages. However, there are signs of a slight pullback in spending as prices for essentials like packaged goods remain high, and rents continue to strain budgets.

In contrast, Home Depot, the country’s largest home improvement retailer, reported a third consecutive quarterly sales decline in early 2024. This trend is attributed to higher mortgage rates and inflation, affecting homeowners and prospective buyers.

Similarly, Starbucks has lowered its sales expectations for the year due to slowing visits to its global coffee shops, with U.S. store spending declining more than anticipated.

Facing competition from Amazon, Walmart has introduced new initiatives to drive sales. Recently, it launched its largest store-brand food line in 20 years, called Bettergoods, aimed at younger, brand-agnostic customers looking for affordable options.

Moreover, Walmart has expanded its customer base to include households with incomes over $100,000 by focusing on its home and fashion categories.

In February, Walmart announced the acquisition of smart TV maker Vizio for $2.3 billion to enhance its advertising business. This deal provides access to Vizio’s SmartCast operating system, enabling Walmart to offer ad space on streaming devices to its suppliers.

However, Walmart is streamlining its underperforming sectors, as seen in its decision to close health centers and virtual care services last month.

For the quarter ended April 30, Walmart reported profits of $5.10 billion, or 63 cents per share, compared to $1.67 billion, or 21 cents per share, in the same period last year. Adjusted earnings per share surpassed estimates at 60 cents, against an expected 53 cents per share.

Quarterly revenue increased by 6% to $161.51 billion, up from $152.3 billion a year ago, surpassing analysts’ expectations of $159.6 billion.

Comparable store sales, including online, rose 3.8% at U.S. Walmart stores, slightly slower than the 4% growth in the previous quarter. Global e-commerce sales grew by 21%, compared to 23% in the fourth quarter.

Walmart remains optimistic, expecting sales for the current year to meet or exceed its guidance.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.