Walmart cutting prices as inflation slows
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Walmart announced its quarterly earnings last Thursday. Photo: Ting Shen/Bloomberg via Getty Images
Walmart is slashing prices amid broader signs that the inflation crisis is over.
Why it matters: The nation's biggest retailer is aiming to extend its competitive advantage by discounting products at a time when consumers are looking for deals.
Between the lines: Walmart said today that it has cut prices on 7,200 products in a bid to maintain what it calls "competitive price gaps" with its rivals.
- The company also raised its forecast for its fiscal year, saying it projects sales growth of 3.75% to 4.75%.
- Consumers, the company said, are "generally stable."
The big picture: The earnings report comes a day after the Consumer Price Index showed that annual inflation dipped below 3% for the first time since 2021.
- Walmart is one of numerous retailers that have announced price cuts in recent months, including Target, Walgreens, Aldi and Ikea. Burger King, Starbucks and McDonald's have also announced value meal deals.
State of play: Walmart has excelled during the inflation crisis by maintaining low prices and delivering what GlobalData retail analyst Neil Saunders today called "superior execution."
- "The company's investments in improving the customer experience while maintaining a value-oriented price position appears to be resonating with customers given Walmart's ongoing revenue growth in a choppy environment," Fitch Ratings senior director David Silverman wrote in a note about the earnings report.
Zoom in: Walmart, like other retailers, has also been doubling down on store brands to drive sales as more Americans have been turning to the budget-friendly brands to save money.
- John David Rainey, the retailer's chief financial officer, said Walmart is "seeing private brand penetration continue to increase" and is "highly encouraged" by customer reaction to its newest food brand, "bettergoods."
- "We want to drive everyday low prices, and we're not intending to achieve any of our margin performance by passing this along to our customers and members in the form of higher prices," Rainey said Thursday.
The intrigue: The company said much of its recent success is due to market share gains among wealthier households.
- Officials said sales of GLP-1 drugs have also contributed to strong comp sales.
- The retailer also saw Walmart+ membership income grow "double digits" and said Sam's Club U.S. had another "record level high for member counts."
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