Walmart Comes Back From The Brink

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What's going on?

Walmart, the world’s biggest retailer, posted better-than-expected quarterly results on Tuesday.

What does this mean?

Hopes weren’t exactly high for Walmart, which issued its second profit warning in 10 weeks at the end of last month. But the company’s discounter reputation helped it expand beyond its lower-income regulars to bring in inflation-pressed higher-income customers. In fact, around three-quarters of Walmart’s market share gain in food came from customers with household incomes of over $100,000 a year. So while inflation-hit shoppers cut back on nice-to-haves like clothing and electricals, Walmart’s sales and profit still both beat expectations. There was relatively good news going forward too: Walmart raised its full-year profit outlook from where it was just three weeks ago, saying it’s now expecting its profit to fall no more than 11% this year.

Why should I care?

The bigger picture: Watch this space.
Walmart is looking to fix that drop-off in profit in part by adding new – ahem – streams of income: the company announced earlier this week that it’ll add Paramount Global’s ad-supported streaming service as a perk of its membership program. Walmart will be hoping the partnership will help Walmart+ – which offers perks like free shipping and discounts – win customers from Amazon, which gives its subscribers unlimited access to Prime Video.

Zooming out: Come one, come all.
Walmart wasn’t the only US retailer to impress investors on Tuesday: Home Depot said there was still strong professional demand for home improvement projects last quarter, which helped cushion the impact of fewer overall store visits. Both that and higher prices pushed Home Depot’s net sales up by a better-than-expected 7% from the same time last year, marking the company’s highest-ever quarterly sales tally on record.

Originally posted as part of the Finimize daily email.

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