For Walmart, the nation’s largest retailer, inflation has become a driver of business.
With consumer inflation at a 40-year-high, most shoppers — rich or poor — will seek out the best prices, CEO Doug McMillon explained.
INFLATION IS CUTTING THE PAY OF MANY AMERICANS
“During periods of inflation like this, middle-income families, lower middle-income families, even wealthier families become more price sensitive. And that’s to our advantage,” McMillon said during the company’s earnings call Thursday.
“So we’ve been through this before. And we run with inflation around the world all the time. Inflation is a different environment in the US right now than it has been in recent times for sure, but we’ve been dealing with inflation in South America and Mexico and other places.”
In January, consumer prices surged 7.5%, the highest since 1982, and producer prices rose by 9.6%, the highest on record.
Walmart is managing to navigate soaring prices, which helped the retailer report solid earnings. Total revenue for the year was $572.8 billion, an increase of 2.4%. US comp store sales rose 6.4% over the same period.
Transactions rose 3.1% in the quarter, while the average ticket rose 2.4%. The company does not disclose average spending per customer.
Not only is Walmart navigating inflation internally, John Furner, President and CEO of Walmart US, said his team has been able to “roll back” prices.
“We’re also seeing the opportunity to increase some of our rollbacks in stores. And we’re really proud of the team. We’re seeing about the same number of rollbacks now that we had at the end of Q1 last year,” Furner said, noting prices for consumer electronics and dry groceries were areas in select stores seeing rollbacks.
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Walmart and Sam’s Club operate 5,342 stores in the US
Shares of Walmart are down 4.6% year-to-date as of Friday, less than the S&P 500’s 8.8% decline.