Walmart raised its annual sales and profit forecast on Thursday for a second time this year as inflation-weary Americans flocked to its stores for inexpensive essentials.
The forecast boost sent shares for the US retailer up 8% to a record high.
Inflation
Walmart’s results suggest that despite several years of above-average inflation, consumer spending remains resilient.
Recently, inflation has shown signs of moderating.
Walmart’s chief financial officer John David Rainey said on a post-earnings call, “We have not seen any additional strain on consumer health in our business.”
This reflected a viewpoint Rainey has held for several quarters.
The retailer’s comments contrasted those of rivals such as Amazon and Home Depot, which warned of consumer caution, even among middle- and upper-income shoppers.
Walmart’s US comparable sales – which combine online and sales at stores open for at least a year – rose 4.2%, beating the 3.3% rise analysts had expected, according to data from the London Stock Exchange Group.
Demand
Those sales were boosted by strong demand for fresh food, particularly produce and high-quality meats, the retailer said.
Shoppers also increased spending on personal care and beauty products, and when it comes to health and wellness, they preferred brands over private-label products.
The company noted that higher-income customers significantly contributed to the sale of home furniture, clothing, appliances and toys, leading to broad market-share gains in these categories.
Results
Walmart reported a 16% increase in membership and other income during the quarter, which contributed to a 22% rise in US online sales.
The retailer’s US business generates 60% of its nearly $650 billion in annual sales.
Walmart’s heft in grocery has largely shielded it from some broader economic pressures.
The company has also strategically invested in store and merchandise upgrades, as well as services such as curb side pickup and delivery, allowing it to capture market share from competitors like Target.
Target’s shares were up 4% following Walmart’s results.
Walmart forecast annual adjusted profit per share to be between $2.35 and $2.43 and consolidated net sales to grow in the range of 3.75% to 4.75%.
These were higher than previous expectations of $2.23 to $2.37 per share and 3% to 4% sales growth.
Overall revenue for the second quarter rose 4.8% to $169.3 billion, beating Wall Street forecasts of $168.53 billion.
Shares rose as much as 8.4% to a record high of $74.44.
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