Walmart’s Caution on Consumer Spending Ahead of Holidays Causes Share Price Drop

Walmart Warns of Consumer Caution Ahead of Holidays, Share Prices Drop

Walmart’s shares fell by 7.7% on Thursday as company executives expressed concerns about higher interest rates and reduced household savings impacting sales in the past two months.

While the company’s focus on groceries has helped offset the overall decline in discretionary spending, with food and daily essentials making up more than half of their merchandise, shopper purchases have been somewhat inconsistent.

Walmart’s Chief Financial Officer, John David Rainey, stated that consumer spending slowed in late October but rebounded in early November, particularly for apparel and home goods.

This has led the company to approach the upcoming holiday season with a slightly more cautious outlook.

Despite the increase in shopper visits during the third quarter, consumers remain selective and are waiting for promotional events like Black Friday and Cyber Monday.

The retail industry as a whole has warned of a less robust holiday season this year.

While Walmart has managed to keep prices low despite inflation, prices of general merchandise goods like apparel and home goods have fallen by three to six percent, allowing the company to reduce prices for the holiday season.

Walmart’s shares reached an all-time high on Wednesday but have since dropped.

The company’s fiscal 2024 earnings per share are expected to be around $6.4.

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