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Retail

Walmart Lifts Targets As Shoppers Pick Low-Priced Groceries For The Holiday

By Dayeeta Das
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Walmart Lifts Targets As Shoppers Pick Low-Priced Groceries For The Holiday

Walmart raised its annual sales and profit forecast for the second straight quarter, signalling a strong start to the holiday season.

The US retail giant has used its size and scale to keep prices low despite inflation, drawing in not just low-income shoppers but also more high-income consumers looking for cheaper options to stretch their budgets.

The strong demand for low-priced products from groceries to clothing and gifts, coupled with better in-stock levels, has helped Walmart take more market share from other retailers – including dollar stores – in recent months.

Walmart now expects fiscal 2024 earnings per share of between $6.40 and $6.48, up from its prior forecast of $6.36 to $6.46.

It sees comparable sales for the full year rising in a range of 5% to 5.5%, compared with an increase of between 4% and 4.5% estimated previously.

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'An Early Start'

"We're excited to get an early start to the holiday season," CEO Doug McMillon said.

Walmart's bigger focus on groceries has also provided a bulwark against the broad slowdown in discretionary spending – more than half of the company's merchandise comprises of food, and other daily essentials, while at rival Target discretionary goods take up a majority of the shelf space.

Profit margins have also improved for Walmart – rising 32 basis points in the third quarter, as the company takes less clearance compared to last year when an inventory glut had forced margin-sapping promotions. Easing supply chain costs have also helped.

The retailer's upbeat forecast echoes that of Target, which projected fourth-quarter earnings above estimates thanks to tighter inventory control.

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Holiday Merchandise

Walmart is also doubling down on holiday merchandise across a wide range of price points to attract inflation-hit customers looking to make Christmas purchases on a budget.

For instance, gift baskets on the Walmart US website cost from as little as about $15 all the way up to nearly $140.

Comparable sales, or sales at Walmart's US stores open at least a year, rose 4.9% in the third quarter ended 31 October, excluding fuel, above estimates of 3.35%. Online sales at Walmart rose 15%.

The company posted an adjusted profit of $1.53 per share in the third quarter. Analysts on average were expecting a profit of $1.52 per share.

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Walmart shares, which have gained nearly 20% this year, were down 1% in premarket trading.

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