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Walmart Reflects Strength in US Economy

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Walmart reported better-than-expected quarterly profits Thursday as strong consumer demand during the festive season offset the hit from higher costs.

The giant retailer pointed to some $400 million in higher-than-expected supply chain costs at its namesake US division, plus an additional $400 million hit due to employee absences during the Omicron variant of Covid-19.

But these effects were countered by “strong underlying trends” at Walmart US, “aided by robust consumer spending and a strong holiday,” Walmart said in an investor presentation.

The company highlighted apparel and automotive goods as items with especially strong demand during the period.

Profits in the quarter were $3.6 billion, compared with a loss of $2.1 billion in the year-ago period as revenues climbed 0.5 percent to $152.9 billion.

The retail industry, like other sectors, is being forced to navigate a challenging inflationary environment due to higher expenses for materials, shipping and labor.

Walmart has said it has taken a careful approach to raising prices that seeks to spread out the hit across consumer “baskets” so that the company doesn’t lose customers to other chains.

The company said its gross profit rate rose during the quarter.

Shares rose 2.3 percent to $136.55 in pre-market trading.

US strong holiday demand, supply chain costs over $400 mn higher than expected at beginning of quarter

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.