The world market leader in sales is increasingly becoming the market leader. American giant Walmart ended last year with sales of $611,289 million (about $574,000 million at current exchange rates) after growing 6.7%. In the fourth quarter, the company accelerated, billing $164 trillion, up 7.3%. The group attracts higher-income consumers who flock to its competitive prices against a backdrop of high inflation.
Inventory clean-ups and cost increases in the first quarters of the year, combined with poor international results, caused full-year profit to fall 14.6% to $11,680 million. In the fourth quarter, however, it grew 76% to 6,275 million, according to figures the company filed with the United States Securities and Exchange Commission (SEC).
However, Walmart expects moderate growth for all of 2023. In the first quarter of the year, it still expects sales to increase by 4.5% to 5%, but for the full year it will be 2.5% to 3%. , according to their forecasts.
Walmart’s reports alone show the changes inflation is making in the spending habits of Americans plagued by price hikes. While grocery sales are up over 15%, sales in the consumer staples categories are down about 5%. In the case of food, price increases and volume increases add up. Walmart attracts customers looking to save on the shopping cart. But when more money goes into groceries, less is left for the rest. The company points to toys, electronics, household and clothing as some of the most heavily penalized areas.
This sales shift has eroded margins in two ways. On the one hand, food products are sold at lower margins and weigh on this measure by increasing their weight in the grand total. On the other hand, weak demand for clothing and household items has led to more aggressive sales and discounts.
The US market concentrates most of Walmart’s business. Revenue increased by 8.3% thanks to a 6.3% increase in the average ticket and a 1.8% increase in transactions. December 2022 was the highest sales volume month in Walmart history.
“We look forward to our moment. The team had a good year-end quarter and, as reflected in our results for the last two quarters, acted quickly and aggressively to address the inventory and cost challenges we faced last year. We picked up speed in the third quarter and continue to do so. We are well positioned to enter this fiscal year,” Walmart chairman and CEO Doug McMillon said in a statement.
Home Depot is growing less
For its part, Home Depot hasn’t been able to grow its sales at a rate close to inflation. The home and decorating giant posted record sales of $157,401 million last year, which closed at the end of January, up 4.1% year-on-year. However, growth slowed to just 0.3% in the fourth quarter.
The group posted net income of $17,105 million, also up 4.1% year-on-year and slowing again in the most recent quarter. In the face of inflation, consumers are prioritizing essential spending and furniture and decorating companies are struggling to grow.
In the case of Home Depot, its financial debt of more than $40,000 million is becoming a heavy burden on its income statement as interest rates rise. Financial spending grew 20% over the past year (to $1,617 million) and 32% (to $451 million) in the most recent quarter.
“Fiscal 2022 was another record year for The Home Depot,” President and CEO Ted Decker said in a statement, noting that the company has already had two years of very strong growth and despite it all, has continued to grow ” persistent inflation, ongoing disruptions to the global supply chain and a tight labor market.”
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