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Shares of the nation’s largest retailer, Walmart, surged over 5% on Tuesday after the company reported revenue and profits that came in above Wall Street expectations, while management also cited progress in reducing excess inventory levels—though consumers are turning to lower-margin items amid higher prices due to inflation.


Walmart reported quarterly revenue of $152.8 billion—compared to $150.8 billion expected by analysts, while net income for the period was $5.15 billion (up from $4.28 billion a year earlier).

The stock jumped 5% to nearly $140 per share on Tuesday, as the retail giant said it benefited from higher prices and increased shopping visits from consumers, with US same-store sales rising 6.5% in the quarter.

Walmart is gaining market share in categories like groceries, but as customers grapple with higher prices due to inflation, they have prioritized lower-margin food items rather than general merchandise.

The heavier mix of sales in grocery, combined with the company’s efforts to continue selling off excess inventory at discounted prices, has put some pressure on profit margins, CEO Doug McMillon warned on a call.

While Walmart has seen more middle- and high-income shoppers visit stores, CFO John David Rainey told CNBC that the company is also seeing more budget-conscious consumers who are spending less in terms of “quality and quantity.”

While many other companies have recently slashed profit outlooks amid inflationary pressures, Walmart reiterated its financial guidance for the second half of the year, forecasting US same-store sales growth of 3% and an earnings-per-share decline of roughly 10%.