Walmart said higher fuel prices could bring more shoppers through its doors.
The retailer reported strong sales growth in the most recent quarter and noted that rising fuel prices could draw more cash-strapped low-income shoppers, even as they drag on its own transportation costs and eventually could lead to higher prices on shelves.
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“The headline consumer is reasonably healthy, but when you look underneath, the pressure is uneven,” said Walmart Chief Financial Officer John David Rainey in an interview. “The low-income shopper you can tell is more budget conscious,” as fuel prices rise, he said. Higher tax refunds in the most recent quarter likely muted some of the impact.
At Walmart gas stations, often in store parking lots, shoppers filled their tanks with an average of less than 10 gallons per trip for the first time since 2022. “That’s an indication of stress,” said Rainey. In this environment, Walmart plans to keep prices low to grab share, but could lift prices later if fuel costs stay high, he said.
Meanwhile, higher-income shoppers are gravitating to Walmart’s fast online delivery services and more premium selection in categories such as fashion and beauty, said Rainey.
The dynamics pushed Walmart’s sales higher, with U.S. comparable sales, those from stores and digital channels operating for at least 12 months, up 4.1% in the three months ended May 1 from a year earlier. Sales rose in its major segments and online, the company said.
It is a familiar pattern for Walmart. The retail giant has often benefited amid times of economic trouble as shoppers look for bargains. Consumer sentiment in the U.S. has fallen to record lows in recent months as higher gasoline prices have exacerbated shoppers’ concerns about the economy, but wage and employment figures have held strong. The national average for regular gasoline is now $4.56, according to AAA, a sharp rise from $3.18 a year ago.
Rainey said the company’s full-year sales would now land in the upper end of its earlier expectations of a 3.5% to 4.5% increase. The company said that for the current quarter it expects sales to increase by 4% to 5%. It said earnings per share would be between 72 and 74 cents, slightly below analysts expectations.
