Like other retailers, Walmart (NYSE:WMT) faces slowing sales as the boom of pandemic-fueled spending fades and inflation hits shoppers’ wallets.
Yet, unlike many competitors, Walmart has a few key factors that could work in its favor: Most of its sales come from food, a category that shoppers need in any economy. It has built its reputation on offering low prices. And its huge reach allows Walmart to make money in other ways, including selling ads, offering delivery services and fulfilling online orders for third-party sellers.
Walmart CEO Doug McMillon acknowledged the challenging retail backdrop on the company’s earnings call in February. Yet he said its business is “naturally hedged..”
“If customers want more of something and less of something else, we shift our inventory,” he said. “If the economy is strong, our customers have more money and that’s great. If things are tougher, they come to us for value.”
The retailer’s top leaders will share the company’s strategy for the year Tuesday and Wednesday at an investor event in Tampa,
Walmart has already noticed changes in buying patterns. In the past few quarters, Chief Financial Officer John David Rainey told reporters that its shoppers have bought more private-label products and opted for cheaper proteins like peanut butter and hot dogs.
Walmart shared a cautious outlook for the year, factoring in economic uncertainty and shoppers’ more discerning approach. It said it expects same-store sales for Walmart U.S. will increase between 2% and 2.5% excluding fuel, in the fiscal year ahead.
WMT shares docked 31 cents to $148.38.