The numbers: sales growth in branches and especially online.
Walmart said its comparable store sales in the United States rose 3.8 percent compared to the same quarter last year. Its U.S. e-commerce business grew 22 percent.
Walmart has performed better than retailers that rely on clothing sales, in part because it also sells essential goods like food. Consumers, particularly those with lower incomes, are looking for ways to save after a period of high inflation.
Transactions rose 3.8 percent, while the average ticket price showed people were spending about as much each visit as they did this time last year. Walmart’s quarterly profit of $5.1 billion was three times higher than a year earlier.
Walmart shares rose more than 6 percent in morning trading as investors reacted to the company’s results and raised growth forecast for this year.
How it happened: A focus on well-heeled buyers.
The retailer said consumers from “higher-income households” helped it gain market share, reinforcing a trend it has observed since Americans began coping with high inflation a few years ago.
In an interview, John David Rainey, Walmart’s chief financial officer, noted that the company is focused on making shopping more convenient through features such as curbside pickup and delivery and diversifying its product offerings, particularly online.
“You think about things like AirPods, MacBook Air — those are things that certainly appeal to a high-income demographic,” Mr. Rainey said. “The more we get into this space and offer such a broad range, I think we will retain this cohort.”
According to Neil Saunders of GlobalData, an analytics and consulting firm, households earning over $100,000 have accounted for the largest gains in Walmart’s market share over the past three years.
What they say: Smooth sailing on choppy seas.
“In a sea of problematic, volatile and confusing consumer spending,” said David Silverman, retail analyst at Fitch Ratings, “it’s interesting how strong and consistent this quarter and many of Walmart’s past quarters have been.”
The bigger picture: Looking for new areas of potential growth.
Walmart has made decisions about where to invest.
As food continues to draw people to stores, the company has introduced a private label line called Bettergoods, offering more upscale menu items such as plant-based and gluten-free options. New products like these could help Walmart retain the younger, wealthier customers it attracted during the height of inflation.
Also contributing to Walmart’s profits was growth in its advertising business, which rose 24 percent in the most recent quarter. The company acquired smart TV company Vizio this year in a deal valued at $2.3 billion. Walmart sees the purchase as a way to increase sales by connecting advertisers with potential buyers.
Walmart also said it would expand a subscription platform that provides suppliers and retailers with real-time visibility into product performance. The Walmart Luminate platform will be available in Mexico and Canada this year.
The business, which doubled in size last quarter, helps suppliers ensure their products are “relevant to the customers that Walmart has today,” Mark Hardy, who oversees the platform, said in an interview.
The downside: cuts and layoffs in some areas.
Not all companies have met the company’s expectations. Last month, Walmart announced it would close its 51 health centers in five states. It said the initiative, launched in 2019, had proven unprofitable.
And Walmart said this week that it had cut several hundred jobs across the company, without providing details. The company is pushing to bring workers back to offices and will relocate employees in its technology division to its headquarters in Bentonville, Arkansas, the San Francisco Bay Area or the New York area.
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2024-05-16 14:35:48
www.nytimes.com
