Blue Steal

Image source: jwblinn - shutterstock

What's going on?

Walmart reported better-than-expected quarterly earnings on Thursday, as the US retailer nabbed customers from right under rivals’ noses.

What does this mean?

Like most retailers, Walmart continued to wrestle with supply chain issues last quarter: the company spent around $400 million more on shipping than planned, even chartering its own cargo ships to make sure products arrived on time. And like most retailers, it’s been forced to raise prices to offset some of those rogue costs. But unlike most retailers, Walmart has the sheer size and negotiating clout with suppliers that allowed it to undercut rivals on price, which allowed it to gain market share in groceries and other key areas.

So it follows that Walmart made almost 6% more revenue from its existing US stores last quarter than the year before, and its outlook for 2022 came in better than expected too. To top it off, Walmart announced it’ll buy back $10 billion worth of its own shares this year, which will reduce their supply and push up their price. No surprises here, then: investors sent its stock up 3% after the update.

Why should I care?

The bigger picture: Is inflation overblown?
Nearly 90% of all Americans live within 10 miles of a Walmart, which means it’s hard not to shop with the retailer. That makes its update a unique insight into how consumer spending is holding up more generally. Walmart’s strong results, then, suggest that high inflation hasn’t necessarily been the deterrent that many economists have warned, and the company’s optimistic forecast suggests it might not be going forward either.

Zooming out: Lucky number 13.
Then again, Walmart is in a particularly strong spot: it sells all sorts of products that Americans need no matter what. Products like those of consumer staples company Nestlé, which reported on Thursday that its organic sales – those excluding the effects of acquisitions and currency swings – grew at their fastest in 13 years last year.


Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Apocalypse Later

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.