As consumers focus on low prices, Walmart’s sales rise

Good news for Walmart might be bad news for the U.S. economy.

The nation’s largest retailer said Thursday that its profit rose 34%, to $6.1 billion, in its most recent quarter as consumers looked for affordable prices amid rising costs and continued economic uncertainty.

Walmart reported a 4.5% increase in sales at stores open for a year or more, a slowdown from the same quarter a year ago. Shoppers also took fewer trips to the stores but spent more when they did.

Affordability has been a priority for many Americans as they wrestle with higher prices from inflation and new tariffs. A mixed employment outlook has added to consumers’ concerns. Although employers added 119,000 jobs in September, the unemployment rate ticked up to 4.4%, a slight sign of weakness. A 43-day government shutdown, the longest in U.S. history, along with layoffs and resignations among federal employees could push some individuals to look for discounted prices.

There were “pockets of moderation” among Walmart’s lower-income families who pulled back on spending, which aligns with broader industry trends, said John David Rainey, chief financial officer at Walmart. Higher income shoppers are continuing to shop at Walmart, a sign that they are also looking to save money where they can.

“Walmart is better insulated than just about anybody, given the value proposition that we have,” Rainey said on a call with analysts. “We like the value proposition that we’re offering for our customers, and you see that’s why we’re gaining share.”

The company has about 7,400 rollbacks – temporarily discounted items – in place, with more than half of them in the grocery aisle. The temporary discounts often led to a permanent price cut, said Doug McMillon, Walmart’s CEO. This year, more than 2,000 rollbacks have become the new price, McMillon added.

Walmart once again raised its forecast for the year, a signal of confidence that customers will continue shopping at its stores and on its websites, as well as its club membership business, Sam’s Club. It now expects sales to increase 4.8% to 5.1% for the fiscal year.

These financial results are closely watched as they help set the tone for the critical holiday shopping period, which typically begins on Black Friday, although some retail analysts count all of November. Company executives said they were already seeing strong sales in the early days of the fourth quarter.

Walmart’s strong results stand in contrast to rival retailers that have offered a more downbeat look at the state of the consumer. This week, Target, Lowe’s and Home Depot cut their profit outlooks for the year.

The stock rose more than 6% in early trading Thursday.

Consumers’ purchases of groceries and general merchandise, like apparel and health and wellness products, fueled Walmart’s growth. Its e-commerce business increased 28%, with growth in its advertising and marketplace business also helping to lift its online sales and improve its operating income.

“We continue working to resist the upward pressure on our cost of goods and to manage our mix,” McMillon said.

President Donald Trump has repeatedly used Walmart as an example that prices are going down by pointing to a report from the retailer that showed the cost of a Thanksgiving meal would be 25% less than it was under the Biden administration. The caveat is that there are fewer items in this year’s Walmart meal bundle compared with last year’s, analyses have shown.

Walmart’s business did show some weakness this past quarter. At Sam’s Club, comparable sales increased 3.8%, down from 7% last year. Transactions and average ticket price were down. In the coming months, the company will usher in some changes. McMillon will step down at the end of January, and John Furner, head of Walmart’s U.S. business, will take his place.

Walmart said it would move its stock listing to the Nasdaq, where it will trade among technology heavyweights like Nvidia, Microsoft and Netflix. The retailer has increasingly been edging into the technology sphere; its tech workers now make up one-third of its corporate workforce.

“Walmart has the skills and the financial firepower to continue its upward trajectory,” Neil Saunders, managing director at retail consultancy GlobalData, said in an emailed statement.

This article originally appeared in The New York Times.