Walmart, the largest retailer and private employer in the U.S., reported another strong quarter, beating Wall Street expectations as the company lured customers with deeper discounts on groceries.

As tracked by Dow Jones Market Data Group, stocks hit a new all-time high on Thursday with the largest percentage increase since March 2020.

Walmart said it saw promising signs in the general merchandise category, reporting flat to slightly increasing sales for the three-month period ended July 31 for the first time in 11 quarters.

In the meantime, the company continued to offer limited-time discounts.

“At Walmart US, we have more than 7,200 markdowns across all categories. Customers of all income levels are looking for value and we have it,” Walmart CEO Doug McMillon told investors on the earnings call. Grocery markdowns increased 35% during the quarter.

Group revenue rose 4.8% to $169.34 billion in the three-month period ended July 31, above Wall Street’s expectations of $168.53 billion. Adjusted earnings per share were $0.67, also above analysts’ expectations of $0.65.

The company also raised its forecast for the full year. It now expects sales to increase by 3.75 to 4.75 percent and earnings of $2.35 to $2.43 per share.

In its U.S. segment, the company generated net sales of $115.3 billion. Sales at stores open at least a year increased 4.2%, largely due to the increase in grocery sales.

A customer looks at bed sheets on display at a Walmart store in Secaucus, New Jersey on March 5, 2024. (Gabby Jones/Bloomberg via Getty Images / Getty Images)

Walmart wins high-income shoppers as high prices persist

Walmart’s profit also exceeded Wall Street expectations in the previous fiscal quarter, although CFO John David Rainey warned that “many consumers’ wallets are still tight.”

The company has been able to consistently attract higher-income shoppers, i.e. households that make more than $100,000 a year, for two consecutive fiscal quarters. This group of top earners also accounted for the majority of the stock’s gains in the previous quarter, the company said. Walmart reported sales of $161.5 billion for the three-month period ended April 30 and gave an optimistic forecast.

Walmart is currently the largest retailer in the US (David Paul Morris/Bloomberg via Getty Images / Getty Images)

The Arkansas-based retailer is a key indicator of the state of American consumers, who are facing rising prices as higher inflation continues to strain budgets.

Walmart CFO says “many consumers’ wallets” are stretched due to persistent high inflation

One positive sign, however, was that inflation eased in July. However, consumers still had to contend with a rise in food prices, which have been a constant pain point for many households for years. The cost of food rose 0.2% over the month, with grocery prices becoming 0.1% more expensive.

Since 2021, food prices have risen by more than 21%.

In April, the company increased grocery price cuts by 45 percent year-on-year to keep sales high, especially among price-conscious customers, and launched its first private label grocery product in decades.

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Joe Feldman, senior managing director of the Telsey Advisory Group, wrote in a study earlier this summer that the price cuts attracted consumers and led to “higher unit sales across all income groups.”

Feldman said the company believes it is “well positioned to gain market share across all income groups and regardless of environment.”

“Expanding the range of quality goods, including premium and private label brands, as well as the convenience of Walmart+ membership and the digital marketplace should help gain and maintain market share among higher-income households,” Feldman wrote.

Walmart shares are up over 38%.