Walmart now expects its total sales to grow by approximately 3.75–4.75 percent, up from earlier projections of 3.0–4.0 percent for this fiscal year. The company also anticipates its profits will increase by about 6.5–8.0 percent, an improvement from previous estimates of 4.0–6.0 percent.
During the Aug. 15 call, Walmart CEO Doug McMillon emphasized the company’s commitment to delivering value to customers in a challenging inflationary environment.
McMillon noted that while fresh food prices have adjusted according to supply and demand, processed foods and consumables have experienced more persistent inflation.
“We’re seeing less upward pressure on prices, but there are still some suppliers pushing for cost increases, which we’re fighting back on aggressively,” McMillon said, stressing that the company aims to avoid passing higher costs on to consumers to protect its bottom line.
“We are not raising prices—we’re lowering prices,” McMillon reiterated. “We don’t want product margins to go up. When we talk about margin improvement in our company, it’s business mix, mix of geographies. It’s not that we’re increasing product margins.”
Company leaders also noted that the second quarter saw slight deflationary trends in Walmart’s U.S. and Sam’s Club segments, offering some relief in specific categories.
McMillon reported that while Walmart U.S. food prices were slightly inflated as the company exited the second quarter, they were down by 30 basis points compared to the first quarter.
One key strategy Walmart has employed to combat inflation is its extensive “rollback” program, which has been well-received by customers. The company reported over 7,200 rollbacks across various categories in Walmart U.S. as part of its ongoing effort to offer more affordable options.
McMillon also highlighted growth in Walmart’s private brand, reflecting a broader trend of customers increasingly turning to Walmart’s in-house labels for quality at lower prices.
Walmart’s international business also experienced growth, with net sales up by 7.1 percent and operating income rising by 14.3 percent, driven by strong performances in markets such as Mexico, India, and China, and an 18 percent increase in international e-commerce sales, according to a company press release.
McMillon highlighted that the international segment continues to contribute positively to the company’s overall sales and profit growth, particularly in key markets like Walmex (Mexico) and Flipkart (India), according to the earnings call.
Walmart leadership acknowledged the ongoing challenges of the inflationary outlook going forward. While fresh food prices have shown some flexibility, McMillon indicated that processed food prices might not decline much more.
In addition, Walmart discussed ongoing investments in automation using artificial intelligence, supply-chain optimization, and e-commerce, which are helping to reduce costs and improve efficiency, allowing the company to pass on savings to customers.
