Walmart shares hit an all-time high

Cars fill the parking lot of the Walmart store at the Buckhorn Plaza shopping center.

(Image credit: SOPA Images / Contributor)

published 7 June 2024

Shares in US retailer Walmart, deemed a “bellwether” for the US consumer, have reached an all-time peak, propelling its market value above $500bn, says Alexandra White in the Financial Times. The bounce is due to an unexpectedly positive quarterly report.

The company boasted revenues of $161.5bn, while net income jumped to $5.1bn thanks to “lower markdowns and better inventory management”. And the firm’s outlook remains “rosy” owing to “stubborn inflation”, prompting wealthier consumers to visit the store.

Walmart certainly seems to be “benefiting from more affluent households trading down”, a trend that has left rivals with a more “middle market” strategy “exposed”, says Hargreaves Lansdown’s Sophie Lund-Yates. But it is also looking to the future, expanding its offering of goods in the hope that “as inflation eases, customers will also be more likely to start splashing the cash on discretionary, non-food items, such as electronics and clothing”.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Broadening the range of products on offer is a sensible strategy given that getting people to buy a new dress “is an easier ask than convincing people to trade back up to branded butter if they’re satisfied with the cheaper option”.

How does Walmart compare to other US retailers?

Walmart’s success stands in marked contrast to the lacklustre results of other major retail brands, such as Starbucks and McDonald’s, which both recently missed analysts’ expectations, says Aimee Donnellan on Breakingviews.

They have been victims of their own “greedflation”, with McDonald’s increasing its gross profit margin from 51% in 2020 to 62% in 2023, while Starbucks’ margin climbed from 16% to 24%. Walmart’s, at 24%, has remained steady.

Starbucks and McDonald’s have been punished: their forward earning multiples are now below pre-Covid levels, while Walmart’s is higher.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri