Walmart stock falls as retailer warns on consumer spending

globalnews.ca:

Walmart on Thursday said that the U.S. consumer continued to exert caution with their spending in the face of inflation and rising interest rates, even as the retailer raised its forecast for sales and profit for the year, sending its shares down 6.4 per cent in premarket trading.

Walmart’s bigger focus on groceries has provided a bulwark against the broad slowdown in discretionary spending with more than half of the company’s merchandise comprising of food, and other daily essentials.

But with higher interest rates kicking in and household savings dwindling, sales have been “somewhat uneven” over the past two months, executives noted on a post-earnings call, giving them pause on the state on the consumer.

Walmart’s Chief Financial Officer John David Rainey told Reuters the company saw shoppers slow down purchases in the second-half of October, and then pick up spending in the early part of November, on items including apparel and home goods, that have been out of favor for most of the year.

“This gives us reason to think slightly more cautiously about the consumer versus 90 days ago,” Rainey said on the conference call.

While shopper visits rose 3.5% in the third quarter, shoppers are “still very choiceful and using discretion” and are waiting for promotional events like Black Friday and Cyber Monday, he said, echoing comments made by Target CEO Brian Cornell on Wednesday.

Core U.S. retail sales rose 0.2% in October as spending ebbed due to higher borrowing costs and the lingering effects from inflation.

Retailers have been forecasting a less-robust holiday season than in years past. In addition to Walmart, retailers

Children’s Place and Bath & Body Works also reported mixed quarterly results Thursday.

Macy’s had strong