May 18, 2023 - Economy

Walmart earnings: Inflation continues to pull in higher income shoppers

Illustration of a dollar sign peeking out of a tractor trailer.

Photo Illustration: Lindsey Bailey/Axios. Photo: George Frey/Getty

Walmart is increasingly attracting higher-income shoppers as consumers look for relief from inflation, Nathan writes.

Why it matters: Price increases throughout the economy have reshaped the shopping landscape, sending some shoppers to places they've rarely frequented in the past.

Driving the news: Walmart on Thursday beat analysts' expectations on revenue, raised its 2024 fiscal-year outlook and reported strong gains in its budding advertising business.

  • Revenue jumped 7.6% to $152.3 billion for the period ending April 30, compared with a year earlier.
  • Comparable sales at U.S. locations rose 7.4%.

What they're saying: "Consumer spending has proven resilient," Walmart CFO John Rainey said on an earnings call, though he added that there are "signs that customers remain choiceful, particularly in discretionary categories."

Zoom in: Grocery sales provided the lion's share of the momentum for Walmart, where it continues to gain share and grow unit volume, Rainey said.

  • "Walmart has not been as aggressive in increasing prices as others," GlobalData retail analyst Neil Saunders wrote Thursday.
  • That decision has led to an influx of new, higher-income customers, he added.

The intrigue: "Inflation has been a friend to Walmart," Saunders wrote.

  • "Household budgets remain under pressure" and "we do not see consumer behavior changing much over the remainder of this year — which means Walmart will likely hold on to its customer gains and increase share further."

Worth noting: Walmart's nascent ad business — which includes ads on the retailer's TV walls, self-checkout screens and digital properties — is gaining steam.

  • In the U.S., the company's Walmart Connect division, which is devoted to advertising, enjoyed a 40% increase in ad sales in its first quarter.

The bottom line: Customers trust Walmart to deliver savings.

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