Walmart CEO Shares Ambiguous Retail Sales Outlook for 2024

As the holiday season intensifies, customers are swarming to Walmart for their celebratory purchases, as well as their routine groceries. Yet, amid the holiday shopping surge, Doug McMillon, the CEO of the retail company, is voicing doubts about the sales outlook for the subsequent months.

During his appearance on CNBC’s “Squawk on the Street,” McMillon deliberated on the future of retail, emphasizing the difficulties in forecasting sales in the aftermath of this peak shopping period. The mixed signals from increasing consumer debt and dwindling savings pose a question mark on future spending patterns. Interestingly, though, the CEO acknowledged that the resilience displayed by consumers this year has exceeded initial expectations.

Recalling his thoughts from earlier this year, McMillon confessed that he anticipated a more subdued market than what we’re currently experiencing. However, he suspects the dynamic might change in the coming year. An intriguing trend in Walmart’s recent performance is the deflation in some product categories. According to McMillon, non-food categories, including electronics and toys, have seen prices drop around 5% compared to the previous year.

“If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we’re actually experiencing.”

David McMillon, Walmart CEO, via CNBC

Highlighting the impact of this trend, McMillon noted that Walmart is offering 25 toys for less than $25 this festive season, such as an affordably priced Hot Wheels car for $1.18. While overall food prices have remained fairly consistent with the previous year, the prices for fresh produce have exhibited more variability.

Despite the drop in prices, Walmart is witnessing a steady recovery in the volume of non-food sales, partially driven by the back-to-school shopping activity. With prices dipping further, McMillon expressed that the performance of general merchandise categories in the following year is something to watch closely.

Throughout the past year, Walmart has carved a niche for itself within the retail industry. The company’s significant grocery segment and its reputation for affordability have buoyed its revenues and stock prices, even as the wider retail sector has seen a dip in sales. This resilience is reflected in Walmart’s nearly 10% rise in shares this year, peaking in November.

Unlike its competitors, such as Target and Macy’s, Walmart’s full-year forecast in November projected sales growth, albeit lower than expected. For the fiscal year, the company is predicting a 5% to 5.5% rise in consolidated net sales and adjusted earnings per share in the range of $6.40 to $6.48.

In a retail market where deflation equates to selling more items to maintain revenue levels, Walmart remains confident of its growth prospects. At the same time, McMillon empathizes with consumers, recognizing the need to ease the financial burdens they face.