Walmart is nabbing the everything store mantle. The $410 billion retailer is chipping away at Amazon.com’s own game while capturing higher end customers who might shop at rival Target. As the economy slows, Walmart will keep growing.
The Bentonville, Arkansas-based company hit its stride on Thursday after reporting for the quarter ending April 30 that comparable store sales in the United States excluding fuel increased more than 7%. It raised both earnings and sales forecasts for the year. Shares were up slightly in the morning.
The company’s main advantage over its other big box peers is its heavy mix of food and dry goods. Walmart captures a quarter of U.S. consumer dollars used to purchase groceries according to Euromonitor. Chief Executive Doug McMillon noted that stubborn inflation has brought in shoppers looking for bargains on groceries but also on general merchandise too. It wasn’t just food. Health and wellness sales rose in the high teens in part because of demand for new diabetes drugs also popular for weight loss such as Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro.
But the strength is in the fine print. Walmart managed to grow its e-commerce sales 26% in the quarter, well ahead of Amazon’s growth of online sales of 3%. That hurts Amazon, who is still struggling to book a consistent profit in its retail business. Meantime Walmart inked earnings of $1.9 billion in the quarter – and has had profits for years.
Other more upscale retailers who cater to higher income consumers are starting to feel the pinch. Home Depot said same store sales will fall between 2% and 5% this year, worse than previously estimated. Target, which also caters to a more discerning shopper, is wrestling with people paying more attention to price fearful that a recession will hit. CEO Brian Cornell said on an earnings call that there are “continued signs of caution among consumers”.
Walmart has over decades become the biggest – and most formidable – competitor in retail, punishing smaller stores and bigger ones alike. As Americans tighten their pursue strings, Walmart plays the long game for market dominance.
Walmart said on May 18 that revenue for the quarter ending April 30 rose 7.6% year-over-year to $152 billion. Walmart U.S. same-store sales excluding fuel increased 7.4%. Target said on May 17 that revenue for the quarter ending April 29 was up 0.6% to $25.3 billion. Same-store sales rose 0.7%. Home Depot on May 16 said sales in the quarter ending April 30 fell 4.2% to $37.3 billion.