With its discount prices, Walmart exceeds its own expectations.
On Thursday, the retailer raised its forecast, saying quarterly sales rose 5% as grocery sales boosted profits. The brand now expects full-year sales to rise 3.75% to 4.75%, up from a 3% to 4% increase.
Walmart shares rose 6 percent in premarket trading and were still up more than 6 percent by midday.
“In this environment, it’s responsible or wise to be a little cautious about the outlook, but we’re not predicting a recession,” Walmart Chief Financial Officer John David Rainey told CNBC. “We’re seeing our members and customers continue to be picky, demanding, price-conscious and focused on things like essentials over non-essentials, but importantly, we’re not seeing any further deterioration in consumer health.”
In the United States, one in four dollars is spent on groceries at Walmart. That equates to $264 billion in grocery sales across the United States for all of 2023. And inflation has only led to more consumers.
By the end of 2023, customers saw prices for staples like eggs increase by around 60%. Butter rose by 30% and lettuce by 25%. As food prices skyrocketed due to inflation, customers who had never shopped at Walmart began looking for alternatives to their usual grocery stores, which had become too expensive. More and more shoppers went to stores like Walmart and Dollar General for their grocery shopping.
Yet even though inflation has recently eased – a much-needed relief for those struggling to keep their fridges full – Walmart appears to be holding on to its customers. According to the latest data from the Bureau of Labor Statistics, prices for some food items are still high. Americans living paycheck to paycheck are still rightly concerned about food prices.
To compete with Walmart’s grocery business, Target has also made its grocery prices more competitive. In May, the company cut prices on more than 5,000 popular grocery items.
“We know consumers feel pressured to make the most of their budgets, and Target is here to help them save more,” said Rick Gomez, executive vice president and chief food, essentials and beauty officer at Target, in the announcement. “Our teams work hard every day to provide great value, and these new lower prices on thousands of items will result in additional big savings for the millions of consumers who shop at Target each week to meet their everyday needs.”
Walmart has also leaned into its growing grocery market. The discounter recently launched a luxury grocery brand called Bettergoods. Vice President of Creative Design David Hartman previously said Fast Company The goal was to create a brand that was “as desirable as the leading national brands.”
The brand also offers a wide variety of options, including vegan, gluten-free, and antibiotic-free products, so customers no longer have to go to Whole Foods or Trader Joe’s for this variety.
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