Walmart on May 18 raised its annual sales and profit outlook as the nation’s largest retailer reported strong first-quarter sales results.
The retailer’s low prices continue to draw budget-conscious consumers to snap up its groceries and other less-expensive, private-label goods.
Groceries account for more than half of Walmart’s sales. The retailer said its groceries market share is growing among higher-income shoppers and younger customers.
Comparable store sales—those from established stores and online operating over the past 12 months—rose 7.4 percent in the quarter ending April, a bit slower than the 8.3 percent during the fourth quarter. Global online sales surged 26 percent.
“Globally, customers continue to seek value given the impact of inflation,” Walmart CEO Doug McMillon told analysts on Thursday. “We see it in the U.S. and in other markets like Mexico, Canada, and Chile.”
Walmart’s overall sales rose 7.6 percent to $152.3 billion, which is also better than most had projected. Walmart’s namesake chain posted a net sales increase of 7.2 percent, while its international business saw a 12 percent uptick. Its warehouse business Sam’s Club had a 4.5 percent increase in net sales.
Along with asking suppliers for the lowest prices, the retailer has also been remodeling its Supercenters by widening aisles, updating fixtures, and adding more bright lights, signage, digital displays, and spaces to showcase home goods.
Walmart also launched a redesigned website and app in April with a cleaner, less cluttered look that highlights deals and tailors items to upcoming holidays or a specific season.
This is helping the retailer gain wealthier households and Gen Z customers, who are looking for both low price and convenience, such as grocery delivery and curbside pickup, McMillon said on a post-earnings call. CFO John David Rainey said sales at the remodeled stores were “a couple of percentage points” higher than those not remodeled.
“In addition to the persistence of inflation and food and consumables, customers were also impacted by a reduction of SNAP benefits and lower tax refunds,” Rainey said on an analyst call. “These impacts were partially offset by higher spending tied to an increase in the cost-of-living adjustment for Social Security benefits.”
According to the company’s release, general merchandise sales declined mid-single-digits, while comparable grocery sales grew in the low double-digits.
The company also saw more customers reach for health and wellness products this quarter, singling out increased demand for drugs used to treat diabetes.
Walmart’s strong results are in stark contrast to rivals Target and Home Depot’s bleak forecasts, which they blamed on weak consumer demand. Walmart’s online sales were also strong, rising 27 percent in the first quarter compared to a 3.4 percent decline for Target during the same period.
Walmart expects consolidated net sales to rise 3.5 percent this year, higher than the previous guidance of 2.5 percent to 3 percent. The company also projects that per-share results for the year will be $6.10 to $6.20, up from the previous range of $5.90 to $6.05.
For the current quarter, it expects per-share results to be in the range of $1.63 to $1.68, below Wall Street estimates of $1.71.
