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Hot dogs vs deli meat; rising costs shape choices at Walmart
By ANNE D'INNOCENZIO
NEW YORK (AP) —
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After being caught off guard by how quickly its customers pivoted, Walmart said that it’s making progress getting rid of excess inventory, though it remains an issue. The company on Tuesday said the decline in profit that it forecast just a month ago will be smaller than it had feared.
Shares of Walmart jumped 5% Tuesday.
Walmart Inc., based in Bentonville, Arkansas, is among the first major retailers to report quarterly results and is considered a crucial barometer of spending given its size and the breadth of its customer base.
Walmart shocked Wall Street three weeks ago when it lowered its profit outlook for the first time since 2015 and shares of a company that thrived during the pandemic tumbled 10%.
The warning followed an announcement by Target, another pandemic superstar, in the previous month that it was canceling orders from suppliers as its inventory piled up, untouched by consumers who no longer wanted to furnish their homes as COVID-19 eased its grip.
Sales of casual clothing, TVs and other electronics that flew off the shelves and into the homes of Americans sheltering in place went flat as people started going to restaurants, shows or traveling again.
Evidence of an enormous consumer shift registered in a number of places at Walmart. Sales of private grocery brands, which are typically less expensive, doubled from the first quarter to the second.
Walmart canceled billions of dollars worth of orders to equalize its inventory and now believes that only about 15% of its total inventory growth during the second quarter is above optimal levels.
The situation stabilized somewhat as the quarter wore on, Walmart said. It saw the influx of new customers, and lower gas prices in recent weeks offered some relief. Strong back-to-school spending helped.
Walmart noted that a vast majority — roughly 75% — of its market share in grocery during the latest quarter was driven by shoppers with $100,000 or more in annual household income...
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