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Business

Walmart profits boosted by ‘high-income’ shoppers

Walmart said its U.S. same-store sales rose 3.8 percent from the year-earlier quarter. Its U.S. e-commerce business jumped 22 percent. Walmart has performed better than retailers reliant on clothing sales, in part because it also sells essentials like groceries. Consumers continue to find ways to save on purchases after a period of high inflation.

Transactions increased by 3.8 percent, while average ticket prices showed on each visit that people were spending about the same as this time last year. Walmart’s quarterly profit of $5.1 billion was triple that of the previous year.

The retailer said consumers from “high-income households” helped it gain market share, reiterating a trend it had seen since Americans began facing high inflation a few years ago. years.

Over the past three years, Walmart has gained more share among households earning more than $100,000 than any other income bracket, according to Neil Saunders of GlobalData, an analytics and consulting firm.

Walmart’s stock rose in premarket trading as investors reacted to last quarter’s results and an upward revision to the company’s growth forecast for this year.

“In a sea of ​​difficult, volatile and confusing consumer spending,” said David Silverman, a retail analyst at Fitch Ratings, “what’s interesting is how this quarter and many of the past few quarters Walmart have been strong and consistent.”

In recent months, Walmart has been making decisions about where to invest.

As groceries continue to draw people into stores, Walmart has launched a private label line called Bettergoods, which offers more upscale items like plant-based and gluten-free options. New products like these could help Walmart retain the younger, wealthier customers it won during peak inflation.

Walmart’s profits were also boosted by growth in its advertising business, which increased 24 percent in the most recent quarter.

The company acquired smart TV company Vizio this year in a deal valued at $2.3 billion. Walmart sees the purchase as a way to increase sales by connecting advertisers with potential buyers.

On Thursday, Walmart also announced it would expand its subscription platform that gives suppliers and merchants a real-time view of product performance. The platform, Walmart Luminate, will be available in Mexico and Canada starting later this year.

The activity, which doubled in the last quarter, helps suppliers ensure their products are “relevant to the customers Walmart has today,” Mark Hardy, who helps oversee the platform, said in an interview.

Not all companies have lived up to the company’s hopes. In late April, Walmart announced the closure of its 51 health centers across five states. He said the “challenging reimbursement environment and escalating operating costs” had made the initiative, launched in 2019, unprofitable.

Walmart also said Tuesday it had cut several hundred positions within the company, while declining to detail which parts. The company has been pushing to bring workers back into its offices and move employees from its technology division to its headquarters in Bentonville, Ark., the San Francisco Bay Area or the New York area. Workers who decide not to relocate will receive severance pay, a company spokeswoman said.

News Source : www.nytimes.com
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