The Numbers
Walmart said its comparable store sales were up 4 percent in the three months that ended in late January compared with the year before. The number of transactions at Walmart rose 4.3 percent, but the average ticket price slightly decreased 0.3 percent, a sign that shoppers spent a little less on shopping trips.
The retailer’s online U.S. sales increased 17 percent, and its online global sales jumped 23 percent, surpassing $100 billion. Losses for the e-commerce business were slowing as the company spent less on fulfillment costs, John David Rainey, Walmart’s chief financial officer, said in an interview. He added that more customers were using Walmart’s delivery services, helping to reduce costs.
“Instead of a Walmart delivery being delivered to one house on a cul-de-sac, now we’re dropping it off at two or three houses from that cul-de-sac,” Mr. Rainey said.
At the same time, he added, U.S. shoppers were pulling back on discretionary purchases, like computers, TVs and other electronics. “Those are the parts of our business where we see less sales growth versus some of the more everyday essentials,” he said.
The Bigger Picture
Walmart is one of the first major retailers to report fourth-quarter earnings. Companies including Target, Macy’s and Kroger will do so in the coming weeks.
Many retailers, including Walmart, focused on value last year as the economy cooled and shoppers became more selective. Walmart’s sizable grocery business and emphasis on low prices helped insulate it from the sales declines that other retailers reported. The company said on Tuesday that its strong comparable sales were underpinned by sales in its food business.
“In food, prices are lower than a year ago in places like eggs, apples and deli snacks, but higher in other places like asparagus and blackberries,” Doug McMillon, Walmart’s chief executive, said during an earnings call on Tuesday.
Mr. Rainey said Walmart had a wider assortment of private label brands now than it did two years ago, as it caters to shoppers looking for lower priced items.
Walmart also said it would acquire the television maker Vizio in a deal worth $2.3 billion as it continued to increase Walmart Connect, its fast-growing advertising and media business.
The Road Ahead
During the high inflationary period in 2022 and through the middle of last year, Walmart won over many customers who were in search of lower prices. The company particularly drew more shoppers with household incomes of more than $100,000. Analysts and investors want to see whether the retailer can keep them as inflation subsides.
General merchandise, which includes apparel and home décor, continues to be bolstered by higher income shoppers, Mr. Rainey said. Two-thirds of the share gain in that category came from households making more than $100,000.
Gaining more new customers will become increasingly difficult, testing Walmart’s ability to continue its sales growth momentum, said Neil Saunders, managing director of GlobalData.
“This essentially puts Walmart in the position of having to work far harder and more creatively to generate growth,” he said in an email.
Still, Walmart sees this as a time to expand. Last month, it said it planned to add 150 U.S. stores, a big jump from the past few years. It has also been increasing pay, bonuses and benefits for store managers in a bid to retain them. On Tuesday, it said it expected both net sales and operating income to increase this year.
These will be metrics that analysts will be watching closely as they expect retail sales industrywide to moderate this year after a surge in consumer spending in the early stages of the pandemic.
Jordyn Holman
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