Walmart raised its full-year forecast on Thursday following a jump in quarterly profits, pointing to solid increases at US stores and e-commerce.
There is a strong relationship between Walmart sales and the US economy. Walmart is the largest retailer in the United States, and its sales are a leading indicator of consumer spending. When Walmart sales are strong, it is a sign that the economy is doing well and that consumers are spending money. When Walmart sales are weak, it is a sign that the economy is struggling and that consumers are tightening their belts.
There are a few reasons why Walmart sales are such a good indicator of the US economy. First, Walmart is a very large company with a wide range of products. This means that its sales are affected by a variety of economic factors, including employment, income, and consumer confidence. Second, Walmart is a national retailer with stores in all 50 states. This means that its sales are not affected by local economic conditions. Third, Walmart is a very data-driven company. It collects a lot of information about its customers and their spending habits. This information allows Walmart to track changes in consumer spending and identify trends early on.
The relationship between Walmart sales and the US economy is not perfect. There are times when Walmart sales do not accurately reflect the state of the economy. For example, Walmart sales can be strong even when the economy is weak if consumers are switching to cheaper brands. However, overall, the relationship between Walmart sales and the US economy is strong and reliable.
Here are some examples of how Walmart sales have been used to forecast the US economy:
- In 2008, Walmart sales fell sharply in the months leading up to the financial crisis. This was a sign that consumers were starting to cut back on spending, and it helped to confirm that the economy was headed for a recession.
- In 2010, Walmart sales rebounded as the economy started to recover. This was a sign that consumers were starting to spend again, and it helped to confirm that the recession was over.
- In 2020, Walmart sales fell sharply as the COVID-19 pandemic caused a nationwide lockdown. This was a sign that consumers were spending less money, and it helped to confirm that the economy was in a recession.
Overall, the relationship between Walmart sales and the US economy is strong and reliable. Walmart sales can be used to forecast the state of the economy, and they can also be used to track changes in consumer spending.
The big retailer, which has been seen as well positioned amid inflation because of its reputation for value, enjoyed another quarter of growing sales at its namesake US stores, with robust demand for groceries and pharmaceuticals offsetting weakness in discretionary consumption and the effects of wage increases.
Walmart reported second-quarter profits of $7.9 billion, up 53 percent from the year-ago period, a period marred by excess inventories due in part to pandemic supply chain issues.
Revenues rose 5.7 percent to $161.6 billion.
“We had another strong quarter,” said Walmart Chief Executive Doug McMillon in a press release. “Food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter.”
McMillon said the company is in a “good position” on inventory, adding “we like our position for the back half of the year.”
Walmart’s US division — which accounted for more than two-thirds of revenues during the quarter — jumped 6.4 percent in comparable sales, a closely watched industry data point.
The business won market share gains in groceries, higher prescription counts and benefited from price hikes on some goods. On the downside, Walmart also cited “softness” in discretionary areas including apparel, home and sporting goods.
Walmart lifted full-year projections and now sees full-year earnings of between $6.36 and $6.46 a share, up 26 cents from the prior range.
Shares rose 1.2 percent to $161.15 in pre-market trading.
Shayne Heffernan
