Walmart Opens the Year With Stronger Sales and Profit

The News

Walmart, the largest retailer in the United States, on Thursday reported higher sales and profit in the first quarter, giving insight into how consumer spending is weathering the high-interest-rate environment.

Walmart has performed better than retailers dependent on apparel sales, in part because it sells essential goods like groceries.Credit…Cj Gunther/EPA, via Shutterstock

The Numbers: Sales grew in stores and especially online.

Walmart said its comparable-store sales in its U.S. business rose 3.8 percent from the quarter a year earlier. Its global e-commerce business jumped 21 percent. Walmart has performed better than retailers dependent on apparel sales, in part because it also sells essential goods like groceries. Consumers are continuing to find places to cut back on their purchasing.

Transactions were up 3.8 percent, while the average ticket price showed with each visit people were spending about the same as they did this time last year. The retailer said consumers from “upper-income households” helped it gain market share, reiterating a trend it has noted since Americans started navigating high inflation a couple of years ago.

Walmart’s quarterly profit, of $5.1 billion, was triple the result a year earlier.

The retailer’s stock rose in premarket trading, as investors reacted to last quarter’s results and the company’s upgraded forecast for growth this year.

The Bigger Picture: Looking for new areas of potential growth.

In recent months, Walmart has been making decisions about where to invest and what to walk away from.

As groceries continue to bring people into the stores, Walmart has introduced a private-label line called Bettergoods, which offers more upscale fare like plant-based and gluten-free options. New products like these could help Walmart hang on to younger and wealthier customers it won over during the heights of inflation.

Walmart’s quarterly earnings were also boosted by the growth in its advertising business. Its global advertising sales increased 24 percent in the latest quarter.

In addition, Walmart has been investing in Walmart Connect, an advertising business it considers a growth driver. The company acquired the smart-TV company Vizio this year in a deal valued at $2.3 billion. Walmart sees the purchase as a way to connect advertisers with potential shoppers, increasing sales within Walmart’s stores and website.

But not all businesses have lived up to the company’s hopes. At the end of April, Walmart said it was shutting its 51 health care centers across five states. It said “challenging reimbursement environment and escalating operating costs” had made the initiative, begun in 2019, unprofitable.