Walmart tops earning expectations as shoppers seek bargains on essentials

Walmart raised its annual sales and profit targets on Thursday as shoppers sought bargains on essentials such as groceries amid high inflation.

Walmart Inc raised its annual sales and profit targets on Thursday as shoppers sought bargains on essentials such as groceries.

Shares of the top U.S. retailer by sales rose after it also reported better-than-expected results for the first quarter.

Walmart has been keeping grocery prices low to fend off competition from Target Corp and Kroger, as Americans continue to struggle with paying high prices for food.

While prices for food eaten at home fell for the second-straight month in April, they remain elevated at 7.1 per cent above a year ago, data from the Commerce department showed last week.

With Walmart accounting for $1 of every $4 spent on groceries in the United States, it’s in a sweet spot.

Sales at Walmart’s U.S. stores open at least a year rose 7.4 per cent, excluding fuel, in the first quarter ended April 30, handily beating expectations of a 5.25 per cent increase.

“We see a continuation of trade-down, certainly as consumers focus on maybe lower-price proteins or lower pack sizes, but we also see private brand penetration continue to do really well for us in the quarter,” CFO John David Rainey told Reuters.

“As consumers have less purchasing power, less buying power, we’re seeing more of their income, their wallets being devoted towards food, and less towards general merchandise.”