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CEO Doug McMillon explained that with consumer price inflation at its highest level in 40 years, most shoppers – rich and poor – will be looking for the best prices.
“During periods of inflation like this, middle-income families, lower-middle-income families, and even the wealthiest families become more price sensitive. That’s in our best interest,” McMillon said during the company’s earnings call on Thursday.
“We’ve been through this before. And we’re dealing with inflation all over the world all the time. Inflation is a different environment in the US now than it was certainly recently, but we’re dealing with inflation in South America and Mexico and elsewhere.”
In January, consumer prices rose 7.5%, the highest level since 1982, and producer prices rose 9.6%, the highest level ever.
Walmart managed to beat the higher prices, which helped the retailer report solid earnings. Total revenue for the year was $572.8 billion, an increase of 2.4%. US department store sales rose 6.4% over the same period.
Transactions were up 3.1% in the quarter, while the average ticket was up 2.4%. The company does not disclose the average spend per customer.
John Woerner, president and CEO of Walmart USA, said that not only is Walmart dealing with inflation internally, but that his team has been able to “step back” on prices.
“We also see an opportunity to increase some of the declines in stores. And we are really proud of the team. We are now seeing the same number of declines now that we had at the end of the first quarter of last year,” said Woerner, noting that consumer electronics and dry grocery prices were areas in stores Selected are in decline.
Walmart and Sam’s Club operates 5,342 stores in the United States
Walmart shares are down 4.6% year-to-date as of Friday, less than the S&P 500’s 8.8% decline.
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