Walmart Inc raised its annual sales and profit targets on Thursday as the retail giant appeals to price-conscious shoppers to buy cheaper groceries, allaying fears that consumer spending may be underwhelming consumer inflation went.
The top US retailer is slashing grocery prices to fend off competition from Target Corp and Kroger, even as the industry struggles with higher costs, particularly for labor.
As a result, sales at Walmart US stores rose at least a year, up 7.4% in the first quarter ended April 30, beating expectations for a 5.25% increase, excluding fuel.
“We see business continuity to the downside, to be sure, as consumers focus on lower-priced proteins or smaller pack sizes, but we also see private label penetration working very well for us. Has been.” in the quarter,” Chief Financial Officer John Rennie told Reuters.
The favorable result contrasts with its competitive target’s not-too-optimistic forecasts for the second quarter, which it attributed to weak consumer demand. Walmart’s estimates for the second quarter exceeded expectations.
The retailer now expects full-year earnings per share of between $6.10 and $6.20, versus a previous forecast of between $5.90 and $6.05. The median for analysts was forecasting a profit of $6.16 per share, according to data from Refinitiv.
The company also expects net sales to increase by approximately 3.5% over the previous forecast.
Internet sales grew 26% compared to a 1% increase a year ago and 17% in the previous quarter.
Operating profit rose 17.3% to $6.24 billion in the quarter, while Walmart’s adjusted earnings per share came in at $1.47, which was better than expected.
CEO Doug McMillan said, “We leveraged expenses, expanded operating margin, and earned more than sales.”
Gross margin declined 18 basis points as Walmart’s core merchandise includes lower-margin groceries. Still, the decline was less than the 83 basis points in the previous quarter.