Rising US consumer prices amid rising rental housing and food prices have raised fears the Federal Reserve will further raise borrowing costs to cool domestic demand, triggering a economic slowdown in the second half of the year.
“There is still a lot of unease and uncertainty around the economic outlook. Balance sheets continue to thin, the savings rate is about half what it was before the pandemic, and we haven’t been in a situation like this where the Federal Reserve raise (interest) rates at the rate that it does,” Chief Financial Officer John David Rainey told Reuters.
Walmart forecast earnings of $5.90 to $6.05 per share for the year through January 2024, compared with analyst estimates of $6.50, according to Refinitiv IBES data.
Investors in Walmart, which operates more than 5,000 stores in the United States, have been closely watching the retailer’s efforts to negotiate better prices from its suppliers and protect itself from competition from rivals like Target Corp, whose products are relatively more expensive.
The consumerspressured by inflation, are increasingly inclined to buy food and consumables rather than general merchandise, which Rainey expects will continue this year and weigh on margins.
This has affected the Walmart’s consolidated gross profit rate, which fell 83 basis points in the Christmas quartermainly due to sales and sales of lower-margin products.
Even soWalmart posted strong demand in the quarter ended January 31with some total revenue of 164.050 million dollars, 7.3% more than last year. Analysts had expected revenue of $159.76 billion. Comparable sales in the United States increased 8.3%, excluding fuel, thanks in part to higher prices and e-commerce sales.
He adjusted earnings per share was $1.71 in the quarter, far exceeding median expectations of $1.51. The firm also raised its annual cash dividend by around 2% to $2.28 per share for fiscal 2024.