Walmart Sees Record Growth as Inflation Concerns Drive More Shoppers to Its Stores

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Amid ongoing inflation concerns, Americans are turning to Walmart for affordable essentials, propelling the retail giant to raise its annual sales and profit forecasts for the second time this year. The world’s largest retailer by sales announced these revised projections on Thursday, leading to an 8% surge in its stock price, which hit a record high.

As one of the first major U.S. retailers to report quarterly earnings, Walmart’s performance provides valuable insights into consumer behavior during a period of economic uncertainty. The company’s results suggest that, despite years of above-average inflation, consumer spending remains robust. Notably, inflation appears to be moderating, offering some relief to shoppers.

John David Rainey, Walmart’s Chief Financial Officer, expressed confidence in the resilience of the U.S. consumer. “We have not seen any additional strain on consumer health in our business,” Rainey stated during a post-earnings call, echoing a sentiment the company has consistently held for several quarters. This optimism stands in contrast to recent warnings from rivals like Amazon and Home Depot, who have noted increased consumer caution, even among their more affluent customers.

Walmart’s U.S. comparable sales, which account for both online and in-store sales at locations open for at least a year, rose by 4.2%—significantly surpassing analysts’ expectations of a 3.3% increase. This growth was fueled by strong demand for fresh produce, high-quality meats, personal care items, and branded health products over generics. The company also reported notable market-share gains in categories such as home furniture, appliances, clothing, and toys, driven in part by higher-income shoppers with annual earnings exceeding $100,000.

The quarter also saw a 16% increase in membership and other income, contributing to a 22% rise in U.S. online sales. Walmart’s U.S. operations generate approximately 60% of its nearly $650 billion in annual sales, making these gains particularly significant.

John Furner, Walmart’s U.S. CEO, highlighted the continuation of strong sales trends into August, particularly with back-to-school shopping underway. He noted that about half of Walmart’s customers had yet to complete their purchases, suggesting further upside in the coming weeks.

Analysts have taken note of Walmart’s success in navigating the current economic landscape. Arun Sundaram of CFRA Research observed, “The U.S. consumer seems to be in a stable position relative to the start of this year, which is encouraging given concerns of a looming slowdown.” Meanwhile, RBC Capital Markets analyst Steven Shemesh pointed out that the increase in higher-income shoppers at Walmart could reflect broader economic concerns but also underscores the success of Walmart’s e-commerce investments.

“Walmart is one of the few companies positioned to gain market share in this environment, while others are witnessing a weaker consumer,” Shemesh remarked. The retailer’s dominance in the grocery sector has largely shielded it from broader economic pressures. Additionally, strategic investments in store upgrades, merchandise, and services such as curbside pickup and delivery have enabled Walmart to capture market share from competitors, including Target.

Scot Ciccarelli, an analyst at Truist Securities, emphasized Walmart’s strategic positioning: “Walmart’s significant investments in pricing, store quality, technology, and supply chain have enabled the company to continue gaining market share, likely offsetting what we perceive as a slower-spending environment.”

Looking ahead, Walmart has forecasted annual adjusted profit per share to range between $2.35 and $2.43, with consolidated net sales expected to grow between 3.75% and 4.75%. These forecasts exceed its previous expectations of $2.23 to $2.37 per share and 3% to 4% sales growth.

In the second quarter, Walmart reported earnings of 67 cents per share, beating analysts’ predictions of 65 cents. Overall revenue increased by 4.8% to $169.3 billion, surpassing Wall Street estimates of $168.53 billion.

Walmart’s stock rose as much as 8.4%, reaching a record high of $74.44 per share. As of mid-August, the stock had climbed 30.7% in 2024, significantly outperforming the S&P 500’s 14.4% gain, underscoring investor confidence in the retailer’s continued growth prospects.