By Siddharth Kaivale and Aishwarya Venugopal
(Reuters) – Walmart on Thursday raised its annual sales and profit forecasts for the second consecutive quarter, but cautious comments from executives for the holiday season sent its shares down 7% in premarket trading.
The company said shoppers slowed purchases in late October, which was in contrast to spending patterns in the prior quarter, echoing comments from other retailers that have seen sales decline.
“Given what we’ve seen, it’s just a flag that perhaps consumers should be a little more cautious,” Walmart Chief Financial Officer John David Rainey told Reuters. High interest rates and declining household finances are also problems, he said. Worry
The US retail giant has used its size and scale to keep prices low despite inflation, causing not only low-income shoppers but also higher-income consumers to look for cheaper options to stretch their budgets.
Rennie said prices for food and consumables have been “more under control” compared to last year, while prices for general merchandise such as apparel and household goods have fallen between three to six percent.
Inflation overall fell to about 2% in the quarter for the US retailer, which operates more than 5,300 stores in the United States.
While the number of shoppers increased 3.5% in the third quarter, shoppers are “still very selective and using discretion” and looking forward to promotional events like Black Friday and Cyber Monday, said Target CEO Joe Biden on Wednesday. Reiterating comments made by Brian Cornell.
Rennie said he still expects the company “to perform better than others this holiday period.”
Walmart shares fell 7% in premarket trading, a day after its stock hit an all-time high of $169.91 following results from rival Target, which reported fourth-quarter earnings that beat estimates.
Walmart shares are up about 20% this year and are relatively more expensive than their peers.
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Walmart now expects fiscal 2024 earnings per share to be between $6.40 to $6.48, up from its prior forecast of $6.36 to $6.46.
It sees comparable sales growth of 5% to 5.5% for the full year, compared to the previously estimated growth of between 4% and 4.5%.
(Reporting by Siddharth Kavale in New York and Deborah Sophia in Bengaluru; Editing by Susan Fenton)