(News Bulletin 247) – With inflation, the American supermarket chain has further benefited from its reputation as a cheap retailer. Walmart is raising its sales forecasts for the current year, attracting consumers on budgets restricted by reduced purchasing power to its shelves.
Retail giant Walmart on Thursday raised its annual sales and profit forecast for the second straight quarter, signaling a successful start to the holiday season as more Americans shop its stores for goods. groceries, clothes but also Christmas gifts, attracted by cheaper prices.
Walmart has leveraged its size and scale to keep prices low despite inflation, cementing its position of choice among low-income households while attracting higher-income consumers who seek more competitive prices.
Market share gains
With better stock levels, the American giant has grabbed market share from its competitors in recent months. Walmart now expects earnings per share for fiscal 2024 between $6.40 and $6.48 (5.90 to 5.97 euros) compared to its previous forecast of $6.36 to $6.46.
Full-year comparable sales are expected to increase 5% to 5.5% versus 4% to 4.5% in the previous estimate. “We are excited about the early start to the holiday season,” said Walmart CEO Doug McMillon.
Focus on everyday products
Walmart is selling more everyday products, which has allowed the brand to protect itself against a slowdown in non-essential spending. More than half of the products Walmart sells are food, drinks and other essentials, unlike rival Target.
Its profit margin also increased by 32 points in the third quarter, as the company carried out fewer clearances than last year, and thanks to reduced costs in the supply chain.
The retailer’s optimistic forecast echoes that of Target, which on Wednesday projected better-than-estimate fourth-quarter profit thanks to tighter inventory controls.
Online sales that are jumping
Walmart has also worked to offer Christmas products in a wide price range to attract consumers hit by inflation.
Comparable sales, that is, sales at Walmart stores in the United States open at least a year, increased 4.9% during the third quarter ended October 31, excluding fuel, exceeding narrowly estimates (4.77%). Walmart’s online sales also increased by 15%.
The company reported adjusted earnings of $1.53 per share in the third quarter. Analysts on average expected earnings of $1.52 per share.
On Wall Street, Walmart fell 6.8%, the group being less optimistic regarding consumer spending by American households.
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