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Walmart discounts boost sales

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Excluding the impact of foreign exchange movements in the prior quarter, sales were up 9%.

Walmart recently announced it would be cutting prices on some non-essential items, such as clothing and some big-ticket items. This is due to excess inventory due to spending changes. That prompted Walmart to cut its profit outlook last month, warning that inflationary pressures would force consumers to spend more on essentials like food and less on discretionary purchases.

The company said these price cuts in the last quarter had received a positive response from customers. I am predicting. His earnings per share for the full year are expected to fall 8% to 10%, excluding the sale, but better than the 10% to 12% decline predicted on July 25th.

CEO Doug McMillon said, “We are pleased that more customers are choosing Walmart during this inflationary period.

He said the need to cut prices on non-food items helped clear excess inventories, even as those price cuts and changes in spending weighed on profits.

“We expect inflation to continue to impact families’ choices, and we are adapting to that reality to be able to better support families,” McMillon told analysts on a conference call with investors. rice field. “Regardless of inflation levels, we will continue to move our strategy forward while dealing with where we have too much inventory.”

General merchandise sales were particularly weak in electronics, apparel and household goods, the company said.

Walmart isn’t just lowering prices, it’s cutting back on what you buy to put on the shelves.

“We have canceled billions of dollars in orders to keep inventory levels in line with expected demand,” said CFO John David Rainey.

US store sales that have been open for at least a year increased 3%, excluding fuel costs. Walmart expects the same growth rate in the second half of this year.

Walmart is the nation’s largest retailer, so its performance is not only an indicator of the health of Walmart itself, but also the strength of the US economy as a whole. Tuesday’s results were another sign that consumer spending remained strong despite worrying indicators of a possible recession in the months ahead.
This is likely due to continued strong employment growth and rising wages. It’s also good news for the economy as a whole, as private consumption accounts for nearly three-quarters of his economic activity in the country.

Even with solid results, it’s hard to predict the company’s sales and the US economy as a whole.

“Changes in consumer behavior are difficult to predict and the pace of change is rapid,” Rainey said.

And one of the things contributing to sales is that the company beat last month’s forecast, but the recent drop in gas prices has made customers spend more money on other goods.

“If we are told that fuel will continue to decline and food inflation will slow, that will affect how we think about general commodity inventories,” McMillion said. Do not enter.”

The retail giant has outperformed Wall Street earnings expectations despite inflation and changing consumer spending habits.

The company reported adjusted earnings of $1.77 per share, down just 1 cent from a year ago basis. Analysts surveyed by Refinitiv had expected earnings to fall to $1.62 per share.

shares of walmart (WMT) It rose more than 3% in premarket trading on the news.