Reuters
- US households are showing the strain of multiple financial pressures, Walmart said Thursday.
- The world's largest retailer said it saw unexpected softness among consumers in October.
- A day earlier, Target noted that shoppers continue to curb spending and delay purchases.
US households have shown a surprising degree of resilience this year against high inflation, low savings, and other financial stressors, but the strain is becoming more visible.
Walmart, which has previously appeared almost immune from the decline in consumer spending affecting other retailers, said Thursday that it saw an unexpected softness in October sales.
"This gives us reason to think slightly more cautiously about the consumer versus 90 days ago," CFO John David Rainey told investors during the company's quarterly earnings call.
Rainey hastened to add that November sales appear normal so far, but the slip was concerning enough to warrant further caution going forward.
"There's a number of different reasons — we can't put our finger on it exactly," Rainey said, citing a year of rising interest rates, declining cash reserves, growing debt loads, student loan repayment, and even "anomalous weather."
Walmart's cautionary tone echoes remarks from Target a day earlier, in which CEO Brian Cornell noted shoppers in his stores responding to those same economic challenges.
"This year, we've seen more and more consumers delaying their spending until the last moment," Cornell said. "Guests who previously bought sweatshirts or denim in August or September are deciding to wait until the weather turns cold before making a purchase."
"This is a clear indication of the pressures they're facing," he added.
Target is responding to its more value-conscious customers with a wider assortment of products at lower price points and an emphasis on everyday value — moves that have the Bullseye brand looking more and more like its larger retail sibling.
This leaner style has served Walmart well this year, the October glitch notwithstanding.
While Target and most other retailers have had a hard time with consumers making more trade-offs — favoring groceries and essentials over discretionary spending — Walmart actually saw a sales lift as new shoppers came to the store for its ultra-low pricing. That's also part of why the October sales glitch made Walmart's C-suite sit up and take note.
In other words, regardless of whether things get better or worse for households in the coming months, as long as people are still shopping, a lot of them will likely be shopping at Walmart.
"I know there's maybe trepidation or concern among consumer health," Rainey said. "This is when we shine. This is when Walmart is at its best."