The Limited Times

Now you can see non-English news...

Walmart grows strongly by attracting high-income customers due to inflation

2022-08-16T11:52:36.723Z

Sales of the distribution giant increase by 8.4% in the second quarter, but the margin deteriorates Walmart is by far the largest-selling retail company in the world. It has the bulk of its business concentrated in the United States, where it is perceived as a popular chain with very competitive prices. The strong inflation that the United States is experiencing has caused more and more middle- and high-income customers to seek to save a few dollars by going to one of its centers. The group's sa



Walmart is by far the largest-selling retail company in the world.

It has the bulk of its business concentrated in the United States, where it is perceived as a popular chain with very competitive prices.

The strong inflation that the United States is experiencing has caused more and more middle- and high-income customers to seek to save a few dollars by going to one of its centers.

The group's sales grew by 8.4% in the second quarter of its fiscal year (from May to July), to 152,859 million dollars (about 149,000 million euros), as reported by the company on Tuesday.

Walmart grows, but its margins deteriorate.

Inflation is causing customers to spend more on food, with prices rising more than 10%, and not having as much money left to buy clothes, household items and appliances, where it used to achieve higher margins and where it has had to apply discounts more aggressive in disposing of inventories.

With this, the operating result fell by 6.8%, to 6,854 million dollars.

Some extraordinary results have, however, allowed net profit to increase by 20.4% in the quarter, to 6,854 million.

The company had already announced at the end of July that it was suffering from problems with margins, a warning that caused a sharp drop in its shares, something that had already happened with the poor results of the first quarter.

He has now published accounts that are actually better than what he implied a few weeks ago and that exceed analysts' forecasts.

In the whole of the first six months of the year, sales grew by 5.4%, to 294,428 million and net profit, 2.8%, to 7,006 million.

Adding to changing consumer behavior are supply chain problems and increases in business costs.

Although inflation has begun to ease somewhat, the company believes that the problems will continue in the second half of the year.

“We are pleased to see more customers choosing Walmart during this inflationary period,” Doug McMillon, the group's chief executive, said in a statement.

“The steps we've taken to improve inventory levels in the US, coupled with a more food-heavy sales mix put pressure on the second-quarter profit margin and our outlook for the year,” he admits.

According to CFO John David Rainey, more than three-quarters of the market share gain in food comes from households with incomes above $100,000 a year.


Agreement with Paramount to provide television to its clients

Walmart has entered into an agreement with Paramount to offer its Paramount+ Essential Plan internet pay TV service to Walmart+ members at no price increase.

It is a way of trying to compete with Amazon without having to develop its own on-demand television offer, as the e-commerce giant has done with Amazon Prime Video.

For Paramount, it means suddenly adding millions of new subscribers, albeit indirectly and with less revenue per client.

Walmart+ is a service that costs 98 dollars a year or 12.95 euros if it is monthly and offers home delivery of products, discounts at gas stations, a free period of Spotify and now, television.

Independently contracted, Paramount+ Essential costs $4.99 per month and broadcasts movies, series and live sports, including some European Champions League soccer matches.

In the statement announcing the deal, the company notes that Walmart+ has had positive member growth each month since its launch in September 2020. The company does not provide the number of subscribers.

Analyst estimates differ widely, from 11 million to more than 30 million.


Source: elparis

All business articles on 2022-08-16

You may like

News/Politics 2022-08-25T10:47:15.172Z

Trends 24h

Latest

© Communities 2019 - Privacy