Walmart Sales Are Up as Consumers Seek More Bargains in Softening Economy

Walmart reported rising sales but lower earnings on Thursday as cash-crunched consumers flocked to its stores in the thick of rising interest rates and stubbornly high inflation.

The nation’s largest retailer also upped its forecast for the year, expecting a net sales increase of 3.5%.

Walmart said its total revenue rose nearly 8% to $152.30 billion, in the first quarter of its 2024 fiscal year over the same period a year ago. Net income fell 18.5% to $1.67 billion. But operating income was up 17.3% to $6.24 billion.

Walmart also reported that its comparable sales, a key industry metric that measures sales at stores open for more than a year, rose 7.4%.

As the economy softens, consumers are curbing their discretionary spending habits and sticking to the staples that Walmart provides such as groceries and gasoline. Nearly 60% of Walmart’s annual sales come from groceries, and groceries offset lower sales of clothing and electronics in the quarter.

Consumers may also be switching from other stores to Walmart, which for decades has delivered lower prices on its groceries and merchandise.

Walmart’s revenue and earnings results beat Wall Street expectations. Its stock rose nearly 2% following the release of its results.

"Walmart is undergoing a remarkable transformation, evolving dramatically beyond its roots as a traditional retailer into a multifaceted household services company, said Nicholas Cauley, an analyst at global research firm Third Bridge. “According to our experts, Walmart+ is poised to record high growth over the next 12 months, leveraging the current economic downturn to its advantage. This potential stems from the offer of free delivery with no minimum purchase requirements.” 

Sales at Walmart’s Sam’s Club were up 4.5% in the three months ended April 30, to nearly $20.5 billion. Sales at U.S. stores were up 7.2% to nearly $104 billion and Walmart’s international sales were up 12% to more than $26 billion.

Online sales jumped 27% year over year for Walmart U.S.

Walmart posted brighter results than Target, which reported a small gain in sales on Wednesday, and Home Depot, which reported declining sales on Tuesday as consumers pulled back on home improvements.

Also on Tuesday, a report from the U.S. Commerce Department showed retail and food service sales rose by 0.4% in April from the prior month to $686.1 billion. That was better than the Commerce Department’s March report showing a 1% decline in month-over-month retail sales.

UPDATED: This story was updated to include comments from analyst Nicholas Cauley of Third Bridge.