Walmart’s CEO isn’t too worried about all the pressure on American shoppers.
„We don’t really care whether the economy is growing at 3%, 2%. [or] Walmart CEO Doug McMillan said Tuesday at the Goldman Sachs Global Consumer Conference in New York City.
McMillan expects 2024 to be „more of the same” as consumers’ wallets are pinched by stubborn inflation, high gas prices and student loan repayments.
„If people have a high sense of value, they come our way,” he explained. „Even better, if they have more money, we’re going to drive more sales, so we have a little protection against that. And we just focus on executing our plan and not worry too much about what’s going on with the broader consumer.”
Investors aren’t too worried either. Walmart stock closed Tuesday at an all-time high of $164.51 per share, well above Monday’s record closing price of $164.34.
Stocks have seen a gradual upswing this month. Shares of America’s largest retailer are up about 16% year to date. That’s more than the Dow Jones Industrial Average’s ( ^DJI ) year-to-date gain of nearly 5%, and it significantly outperforms Target Shares ( TGT ), which is down more than 17%.
In the retailer’s second-quarter results, Walmart grew same-store sales by 6.3%, beating expectations of 4.04%, according to data from Bloomberg. Walmart’s foot traffic also increased 2.8% in the quarter, along with higher average ticket and online sales.
„We see further upside pointing to improving general merchandise trends and continued equity gains across income groups,” wrote Goldman Sachs analyst Kate McShane, who co-manages the group with CEO Doug McMillian.
Walmart Sees Inflation But High Prices Still 'With Us’
Notably, Walmart is starting to see some signs of inflation, McMillan said. But don’t expect prices to drop significantly anytime soon.
„We have inflation and high prices,” McMillan said. „We will see inflation but not a return to deflation. … Certainly not in the short term.”
When asked about inflation, particularly in grocery stores, he said, „I think it’s going to slow.”
„We like to see the opportunity for consumers to have higher inflation and lower prices sooner,” McMillan added. „What we’ve seen over the last few years is dry grocery consumables have had a big two-year stock inflation number, and that’s been coming down a little bit, but not a lot.”
The latest inflation data is expected on Wednesday morning. In July, the Bureau of Labor Statistics (BLS) reported that grocery prices rose 0.3% on a monthly basis. Consumer Price Index (CPI). On a year-over-year basis, prices for food at home rose 3.6%, a slower rate than the previous month.
For common business categories such as clothing and home furnishings, the decline in inflation „looks faster,” McMillan said, but higher prices are here to stay compared to two years ago.
„In general merchandise, prices are lower than they were a year ago, but they’re not lower than they were two years ago,” McMillan said. „I don’t think public goods will go back to the prices of two years ago.”
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