Walmart Raises 2024 Outlook as Shoppers Seek Low Prices

Walmart has raised hopes for the U.S. economy by forecasting strong sales for the remainder of the year following a robust second quarter. The retail giant reported a 4.2% increase in U.S. sales for the three months ending in June, surpassing analysts' expectations. This positive news contrasts sharply with Home Depot's recent grim outlook and comes after disappointing job data that had negatively impacted the stock market. Walmart's stock surged over 6% in early trading, reflecting investor optimism. Despite reporting earnings of $4.5 billion, or 56 cents per share, for the quarter ending July 31—down from $7.9 billion, or 97 cents per share, a year earlier—Walmart's adjusted earnings of 67 cents exceeded Wall Street expectations. The company also noted a significant increase in the number of transactions and average spending per visit, indicating a shift in consumer behavior towards store-label goods and discounts. Walmart implemented 7,200 price rollbacks, particularly on food items, to attract cost-conscious shoppers. Walmart has revised its earnings per share forecast for the year to between $2.35 and $2.43, up from previous estimates. The retailer's full-year sales growth is projected to be between 3.75% and 4.75%. This optimism comes as the U.S. economy shows signs of cooling, with inflation rates declining, potentially paving the way for the Federal Reserve to consider interest rate cuts. As the largest U.S. retailer, Walmart's performance offers insights into consumer spending trends, which remain crucial for the economy. While retail spending has seen a notable increase, consumers continue to face challenges with rising costs, prompting a shift towards more affordable options.