Walmart, the nation’s largest retailer, is set to report its quarterly earnings on Thursday, providing valuable insights into consumer spending habits and the state of the broader economy. Analysts are expecting earnings per share of 65 cents and revenue of $168.53 billion for the big-box retailer.
Over the past two years, Walmart’s reputation for value has driven sales, particularly among higher-income shoppers seeking to stretch their dollars. However, inflation has been a concern, with prices remaining higher than pre-pandemic levels. Despite inflation moderating and returning to historic levels in July, consumers are still feeling the strain and frustration.
The recent jobs report from the Labor Department, which revealed slower growth and a higher-than-expected unemployment rate, further raised concerns about the economy. Home Depot’s earnings report also added to worries, as the company warned of slow sales in the coming months and consumer caution among its middle- and upper-income customer base.
Walmart CEO Doug McMillon and finance chief John David Rainey have consistently emphasized that consumer behavior has remained consistent, with shoppers prioritizing value and being selective in their spending. Retail analyst Steve Shemesh and other investors will be closely watching for any changes in tone during the earnings call.
Walmart’s value reputation and its large grocery business make it more resilient than its peers in a challenging economy. The company had previously stated that it expects to be on the high end or slightly above its full-year guidance, predicting net sales growth of 3% to 4% and adjusted earnings per share between $2.23 and $2.37.
If Walmart disappoints in this quarter’s earnings, it could raise concerns about the company’s performance and potentially signal challenges for other retailers. Conversely, if Walmart surpasses expectations, it may indicate that the broader consumer market is doing well. However, the strong performance could also be attributed to even affluent shoppers relying on Walmart for a wider range of goods.
In addition to attracting inflation-weary shoppers, Walmart has taken steps to drive growth by expanding its third-party marketplace, increasing advertising sales, and growing its subscription service, Walmart+. The company has also launched a new grocery brand called Bettergoods, offering affordable meal solutions as an alternative to fast food.
Shares of Walmart have performed well this year, with a nearly 31% increase compared to the approximately 14% gains of the S&P 500. This demonstrates investors’ confidence in the company’s ability to weather economic challenges.
Overall, Walmart’s earnings report will provide valuable insights into consumer behavior and the state of the economy. Investors and economists will be closely watching for any indications of changing consumer trends and the potential impact on the broader market.
