Walmart Inc raised its annual sales and profit targets on Thursday as shoppers sought bargains on essentials such as groceries.

Shares of the top U.S. retailer by sales rose about 1.5% in pre-market trading after it also reported better-than-expected results for the first quarter.

Walmart has been keeping grocery prices low to fend off competition from Target Corp and Kroger, as Americans continue to struggle with paying high prices for food. While prices for food eaten at home fell for the second-straight month in April, they remain elevated at 7.1% above a year ago, data from the Commerce department showed last week.

With Walmart accounting for $1 of every $4 spent on groceries in the United States, it’s in a sweet spot.

Sales at Walmart’s U.S. stores open at least a year rose 7.4%, excluding fuel, in the first quarter ended April 30, handily beating expectations of a 5.25% increase.

“We see a continuation of trade-down, certainly as consumers focus on maybe lower-price proteins or lower pack sizes, but we also see private brand penetration continue to do really well for us in the quarter,” CFO John David Rainey told Reuters.

Walmart laying off hundreds of US workers at five e-commerce fulfillment centers

“As consumers have less purchasing power, less buying power, we’re seeing more of their income, their wallets being devoted towards food, and less towards general merchandise.”

U.S. comparable grocery sales grew in the low double-digits in the quarter, helped by strong demand for food and increased purchases from wealthier households, the company said.

The company also saw higher demand for health and wellness products.

People also shopped more online, helping Walmart’s U.S. Ecommerce sales grow 27% in the quarter. By contrast Target’s digital comparable sales fell 3.4% in its most recent quarter.

On a post-earnings conference call with analysts, CEO Doug McMillon said he remained “uncertain” about the back half of the year as inflation remained “stubborn” in dry groceries and items made for immediate consumption.

Still, Walmart’s strong results are in stark contrast to smaller rival Target and Home Depot’s bleak forecasts, which they blamed on weak consumer demand. Walmart forecast second-quarter results above expectations.

“Walmart’s solid quarter underlines the view that the big-box retailer … is better suited for the current economic climate than some of its industry peers, such as Home Depot and Target,” said Jesse Cohen, senior analyst at

“Walmart has managed to weather the current operating climate better than most of its peers.”

Walmart now expects full-year earnings per share in the range of $6.10 to $6.20 compared to the prior outlook of $5.90 to $6.05. Analysts on average were estimating a profit of $6.16 per share, according to Refinitiv data.

The company also forecast net sales to rise about 3.5%, higher than its prior outlook of 2.5% to 3%.

Operating income rose 17.3% in the first quarter, in part due to higher contributions from its advertising, delivery and fulfillment services businesses. Walmart’s adjusted earnings per share came in at a better-than-expected $1.47 per share. Net revenue rose 7.6% to $152.30 billion in the first quarter, beating estimates of $148.76 billion.


Comments are closed.