Walmart Earnings Preview: Consumer Spending Trends and Economic Insights Await

Walmart's upcoming earnings report is eagerly anticipated, offering insights into consumer spending and economic health. Analysts expect strong performance amid mixed economic signals, with Walmart's value-focused strategy attracting budget-conscious shoppers and higher-income consumers seeking savings.

Staff Editor August 15, 2024 2 min read

Walmart Set to Report Earnings Amid Economic Uncertainty

Walmart, the nation’s largest retailer, is poised to release its quarterly earnings report on Thursday, offering crucial insights into consumer spending habits and the broader economic outlook. As investors and economists eagerly await the results, the retail giant’s unique position in the market makes its financial performance a key indicator of American household health.

Analysts expect Walmart to report earnings per share of 65 cents and revenue of $168.53 billion. The company’s earnings come at a time when recent economic data has painted a mixed picture of the U.S. economy. While inflation has moderated to historic levels, with the consumer price index rising 2.9% in July compared to a year earlier, prices remain elevated compared to pre-pandemic levels, stretching consumers’ budgets.

Walmart CEO Doug McMillon and CFO John David Rainey have consistently noted that shoppers are seeking value and being selective about their spending. This trend has driven more higher-income consumers to Walmart over the past two years, potentially bolstering the company’s performance.

RBC Capital retail analyst Steve Shemesh emphasizes the importance of Walmart’s earnings tone, given the company’s reputation for value and its substantial grocery business, which tends to be more resilient in challenging economic times.

Walmart expects to be on the high end or slightly above its full-year guidance, which includes net sales growth of 3% to 4% and adjusted earnings per share of $2.23 to $2.37. The company is also driving growth through non-traditional retail channels, including expanding its third-party marketplace, increasing ad sales, and growing its Walmart+ subscription service.

In a recent move to attract budget-conscious consumers, Walmart launched a new grocery brand, Bettergoods, with most items priced under $5. This line includes meal solutions like frozen pizzas and chicken wings, positioning them as cheaper alternatives to fast food.

As of Wednesday’s close, Walmart shares stood at $68.66, with the stock up nearly 31% this year, outperforming the S&P 500’s approximately 14% gains. The market’s reaction to Walmart’s earnings report could provide valuable insights into consumer behavior and the overall economic outlook, making it a closely watched event for investors and economists alike.