- Walmart raised its annual sales and profit targets because of consumer preference for cheaper food.
- The strategy of low prices and private labels allowed a growth of 7.5% in the stores of the United States, exceeding the expectations of 5.3
- %. Walmart expects earnings per share of between $6.15 and $6.25 for the year and forecasts 3.4% growth in net sales.
Walmart improved this Thursday, May 18, 2023, its annual sales target and its earnings expectation. In its financial report, the retail giant said that consumers leaned more than expected towards cheaper food, a market segment in which the brand has its greatest strength.
In the United States, its biggest market, Walmart stuck to its strategy of avoiding further increases in basic products to fend off competition from two other giants, Target and Kroger, even as the entire industry is in deep trouble from rising costs, in labor special.
As a result, Walmart’s US store sales grew 7.5 percent, excluding gasoline, in the fiscal quarter ended April 30.
Previous expectations were that sales would improve by 5.3%, so there are celebrations among the company’s investors.
Walmart’s chief financial officer, John Rainey, told Reuters that “customers are looking for lower prices and smaller pack sizes, with strong private or white label penetration.”
These Walmart results and expectations contrast with Target’s second-quarter forecasts.
Indeed, as we published in Merca2.0 this Wednesday, the US retailer’s sales did not grow in the first quarter (February-April) because consumers are spending less on each purchase, especially on non-essential and discretionary items, due to inflation. which does not give way (as in most of the world) and to interest rates that continue to rise.
This phenomenon impacted Target, which earns a lower proportion of its revenue from the sale of essential products, such as food and household items, compared to other chains, such as Walmart.
financial report of Walmart Q1YF2023.
Walmart and its expectations for 2023
Turning to Walmart, the US giant now expects full-year earnings per share of between $6.15 and $6.25, versus previous forecasts of between $5.95 and $6.00.
The company also expects net sales to grow 3.4 percent, above previous forecasts.
An important fact: online sales grew 25 percent year-on-year, compared to an increase of just 1 percent a year ago and 17 percent in the previous quarter (November-January).
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