Shoppers looking to stretch their paychecks continue to turn to Walmart, with the nation’s largest retailer saying on Thursday that it expects to maintain the solid pace of sales growth it achieved last year.
Yet company executives are wary of the uncertain U.S. economy, issuing a relatively tepid profit forecast amid a fragile job market, unpredictable trade policies and the struggles of low-income consumers.
U.S. households are grappling with stubborn inflation but have been buoyed by strong hiring at the beginning of the year. The economy added 130,000 jobs in January and the unemployment rate fell to 4.3 percent.
Walmart has performed well in this environment, with sales up 5.6 percent, to $190.7 billion, in its most recent quarter, driven by momentum in both the United States and abroad. Across retail, shoppers still spent big throughout the holiday season despite the economic pressures as they looked for discounts, compared prices and used buy now, pay later programs.
In a presentation to investors on Thursday, Walmart said that growth at its U.S. stores was “led by upper-income households.” Wealthier Americans, buoyed by the stock market, have continued to spend freely as lower-income households have pulled back, an increasingly stark phenomenon known as the K-shaped economy.
U.S. big box stores began a new era this month as Walmart and its rival Target each welcomed new chief executives on Feb. 1. Target’s new boss, Michael Fiddelke, faces a turnaround effort from his base in Minneapolis, but Walmart’s John Furner steps into a much healthier situation at the retailer’s headquarters in Bentonville, Ark.
Just days after Mr. Furner replaced Doug McMillon, Walmart surpassed $1 trillion in market value, joining a club of corporations that consists largely of technology giants like Apple and Microsoft. Walmart’s shares slipped in premarket trading on Thursday, as investors assessed the company’s lighter-than-expected profit forecast.
Under Mr. McMillon, who ran the retailer for 12 years, Walmart transformed into a digital powerhouse and lured wealthier shoppers to its stores and website by improving its mix of merchandise in categories like beauty, apparel and furniture. It also expanded its selection of private label goods to add trendy fashion and food.
Mr. Furner is expected to accelerate Walmart’s push to become a high-tech retailer. In January, he sat onstage at a retail conference in Manhattan alongside Google’s chief executive, Sundar Pichai, to declare that artificial intelligence was the future of retail. The pair announced a partnership to expand A.I.-powered shopping.
“The future is fast, convenient and personalized,” Mr. Furner said in a statement accompanying Walmart’s earnings on Thursday.
Mr. Furner, who has worked at Walmart for more than three decades and previously ran its U.S. business, must now guide the retailer through a transitional period. In January, the company made several changes to top staff, naming a new chief growth officer and new leaders for Walmart U.S., Walmart International and its Sam’s Club business.
Kim Bhasin is a business reporter covering the retail industry for The Times.
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