Walmart is by far the largest retail company in the world. The bulk of its business is concentrated in the United States, where it is considered a popular chain with very competitive prices. The severe inflation that the United States is experiencing is causing more and more middle- and high-income clients to seek to save a few dollars by visiting one of her centers. Group sales rose 8.4% in the second quarter of the fiscal year (May to July) to $152,859 million (about €149,000 million), the company said on Tuesday.
Walmart is growing, but its profits are deteriorating. Inflation forces customers to spend more on food, while prices rise by more than 10%, and they do not have enough money left to buy clothes, household items and appliances, where it used to allow for higher margins and where they had more apply discounts. aggressive inventory management. At the same time, the operating result decreased by 6.8% to $6.854 million. Some outstanding results, however, helped boost net income by 20.4% for the quarter to $6,854 million.
The company had already announced at the end of July that it was suffering from margin problems, a warning that sent its shares plummeting, as has already happened to poor first-quarter results. Now he has released some reports that are actually better than what was thought a few weeks ago and that are above analysts’ forecasts. In general, for the first half of the year, sales increased by 5.4%, to 294,428 million, and net profit – by 2.8%, to 7,006 million.
Adding to the change in consumer behavior are supply chain problems and increased commercial costs. Although inflation has begun to ease slightly, the company believes that the problems will continue in the second half of the year.
“We are pleased to see more customers choosing Walmart during this inflationary period,” said Doug McMillon, Group Chief Executive Officer. “The measures we have taken to increase inventory levels in the United States, together with a range of high-weight food sales, have put pressure on second-quarter earnings and our forecasts for the year,” he admits.
According to CFO John David Rainey, more than three-quarters of food market share gains come from households with incomes above $100,000 a year.
Agreement with Paramount to provide television to its customers
Walmart has entered into an agreement with Paramount to provide the Paramount+ Essential Plan pay-TV service to Walmart+ members at no price increase. It’s a way to compete with Amazon without having to develop your own on-demand TV offering like the e-commerce giant did with Amazon Prime Video. For Paramount, this means the sudden addition of millions of new subscribers, albeit indirectly and at a lower revenue per customer.
Walmart+ is a service that costs $98 a year or €12.95 a month and offers home delivery of groceries, discounts at gas stations, a Spotify free period, and now TV. Independently contracted for $4.99 a month, Paramount + Essential carries movies, TV shows and sports, including select European Champions League football matches.
In a statement announcing the deal, the company notes that since its launch in September 2020, the number of Walmart+ subscribers has increased on a monthly basis. The company does not disclose the number of subscribers. Analyst estimates vary widely, ranging from 11 million to more than 30 million.