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

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

Warning on radar

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

Bloomberg


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.

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“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.

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“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.

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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.

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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.