Walmart: After balance sheet, retailer adopts cautious outlook on US consumption and shares fall 8% in NY

“We are more cautious about consumers than we were 90 days ago,” said Chief Financial Officer John David Rainey.

Bloomberg


16 November 2023 at 6:22 pm – Updated 1 hour ago

Retailer Walmart Inc. Shares registered a sharp fall in the session this Thursday (16), after the balance sheet in New York, after the company adopted a cautious tone about the prospects for North American consumers, after signs of weakening demand at the end. October.

“Consumers are more cautious than they were 90 days ago,” Chief Financial Officer John David Rainey said in Walmart’s financial results on Thursday.

There was a “precipitous drop” in sales in the last two weeks of October, Rainey said. While November is off to a good start, due to sales and holiday shopping, higher interest rates and student loan payments are weighing on demand.

“The bottom line for us is we’re seeing strength, we’re seeing share gains relative to others, but there’s still pressure on consumers,” the finance director said.

Walmart’s low-key tone points to uncertainty surrounding consumer spending, a bulwark of the U.S. economy, even as the company has higher sales than many rivals.

Excluding fuel, comparable sales at Walmart’s U.S. unit rose 4.9% in the three months ended October. That measure reported declines this week as consumers continued to make discretionary purchases.

Shares fell as much as 8.1% in premarket trading in New York. Walmart is up 20% this year through Wednesday, compared with the S&P 500 index’s 17% gain, and shares were down 8.09% at US$156.04 after Thursday’s balance sheet.

Walmart slightly raised its earnings forecast to $6.48 per share for the fiscal year ending in early 2024. The world’s largest retailer previously had its earnings outlook at $6.46 per share. Wall Street had an estimate of $6.48.

But the forecast for a 7% to 7.5% increase in operating profit has barely changed, Rainey said, and will be at the low end of that range.

Their warning points to a holiday shopping season that could see deep discounts boost sales — welcome relief for shoppers but tough on retailers’ bottom lines.

“Consumers are waiting for these events, to buy these promotional activities,” he said.