Walmart CEO Doug McMillon Discusses Holiday Shopping Season and Sales Outlook
Holiday shoppers are increasingly turning to Walmart for their groceries and gifts, but CEO Doug McMillon has expressed uncertainty about how sales will look in the months following the peak shopping season. In an interview with Sara Eisen on CNBC’s “Squawk on the Street,” McMillon highlighted the challenges posed by higher credit card balances and dwindling household bank accounts, which raise questions about consumer spending habits.
“If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we’re actually experiencing,” McMillon said. However, he added that “next year’s a different story.”
One factor creating a new dynamic for Walmart is deflation in some items. McMillon noted that prices in the general merchandise category, which includes electronics, toys, and other nonfood items, have dropped by about 5% compared to a year ago. As an example, Walmart is offering 25 toy items under $25 this holiday season, including a Hot Wheels car for $1.18. Prices in food categories, on the other hand, have remained relatively stable.
The company has seen a rebound in the volume of its nonfood sales, with back-to-school shopping contributing to the recovery. McMillon emphasized that the lower prices in general merchandise categories will be interesting to watch in the year ahead.
Walmart has stood out among retailers over the past year due to its large grocery business and low-price reputation, which have helped prop up its revenue and stock price during a period of weakened retail sales. As of Tuesday’s close, Walmart shares had climbed nearly 10% this year, reaching an all-time high in mid-November.
While Walmart gave a lower-than-expected full-year forecast in November, the company projected sales growth, unlike its competitors Target and Macy’s. Walmart expects consolidated net sales to rise 5% to 5.5%, and adjusted earnings per share to be $6.40 to $6.48 for the fiscal year.
Deflation, or falling prices, presents a challenge for Walmart and other retailers as they need to work harder to sell more items when each item costs less. However, McMillon expressed confidence in Walmart’s ability to drive growth even in this environment. He also acknowledged the importance of easing pressure on shoppers’ budgets.
