What Walmart's Q1 earnings are revealing about US consumers

Walmart (WMT) posted its first-quarter earnings report revealing revenue that beat expectations and showed a growth in its e-commerce arm. Comparable sales and transactions rose 3.8% in the US, while the average ticket price was flat. Walmart CFO John David Rainey joined Yahoo Finance to give insight into the state of the consumer from Walmart's perspective, claiming consumers' wallets are "stretched."

Yahoo Finance's Rachelle Akuffo joins Wealth! to break down the numbers behind Walmart's latest quarterly report.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video Transcript

America's biggest retailer is holding on to its recent momentum.

WalMart reported stronger than expected first quarter revenue and same store sales results, driven by a big jump in E commerce sales and more visits to its giant super centres.

The company benefiting from gaining market share as consumers seek convenience.

And here to tell us more about the consumer, we've got Yahoo Finance's Rochelle Ao rochelle.

We gotta dive into this.

What?

What did you What did you see?

I mean, 22% My goodness, on the ecommerce side there, I'm telling you that this is why Walmart is keeping its crown as the largest retailer.

You're seeing consumers continuing to bargain hunt, and it's happening across all income levels now.

Comparable sales in the US rose 3.8%.

Transactions also grew 3.8% for the quarter, but the average ticket was flat.

So you're having more transactions here, but not necessarily at a higher level.

So Walmart CFO John D Rainy joined Yahoo Finance this morning with how he sees the consumer story take a listen.

The consumer has been relatively consistent.

We are like everyone else is looking for, uh, if there's something there, something that we should be more aware of.

But they've been pretty consistent quarter to quarter here.

We see that wallets are still stretched.

They're still looking for value.

They're still using discretion with buying those those higher income items.

And what's interesting, These higher income earners who sought some of these bargains during peak inflation?

They've been sticking with Walmart, making up the quote the largest cohort behind share gains in nearly every category.

Now for shoppers who prefer to buy in bulk, including small businesses not just people who show up to buy a canoe from, say, Sam's Club.

Now that's a WalMart subsidiary of WalMart.

That was also a stand out.

We saw comparable sales 4.4% higher, which also added grocery market share and added boost and, of course, boosted Walmart's overall comp sales data.

Now investors did have an inkling, especially if you look at some of the data compiled from seeking Alpha, which showed that Walmart was the least shorted consumer staple stock in the S and P 500 for April.

So clearly there are a lot of people seeing this continuing flocking of bargain hunters, but it you know when you think WalMart shop as you think.

You know.

Perhaps it's just people looking for a B, but it's across all income levels here, Brad.

I mean, absolutely.

And they've got some great golf shorts for 13 bucks as well, so you can't argue with that.

What can we take away from this report about where consumers are headed next?

And the sentiment?

Well, obviously, when you look at Walmart, Walmart is considered a bellwether because it covers a bit of everything.

It's logistics at shopping, but it really comes down to meeting consumers where they are right now, financially and physically.

And so placer dot a I uses data on things like foot traffic transactions, digital shopping behaviour, which, of course, you mentioned E commerce as well as the demographics of consumers to help retailers figure out the trends ahead.

Where to find these consumers and how they're shopping.

And it's interesting because Walmart dominating there, too.

So places dot a I is finding that the Walmart ban receives over 60% of all visits to target Walmart, Costco, Sam's Club and BJ's, especially in the South, where Walmart superstores relative visit share tops 70% now you will see there are plenty of other states and areas where Walmart isn't dominating as heavily so some potential for more expansion for WalMart or potentially more competition as rivals see some some openings there.

Another interesting angle that we're seeing from WalMart and some of these specific brands that you do have to dig into because there is a lot of nuance here, stronger sales growth in international markets than in North America, where you are still seeing that inflation story play out there.

So certainly some opportunities to be had might have to look overseas as well for some of those deals.