From MoneyWeek: 2024-06-07 04:15:36

Shares in US retailer Walmart have hit an all-time high, pushing its market value above $500bn. The spike follows a positive quarterly report, with revenues at $161.5bn and net income at $5.1bn due to improved inventory management. Walmart is benefitting from affluent consumers trading down, leaving competitors vulnerable.

To capitalize on rising consumer spending, Walmart is expanding its product range to include more discretionary items like electronics and clothing. This move aims to attract customers as inflation eases, allowing them to spend more freely on non-essential purchases.

In contrast to Walmart’s success, major retailers like Starbucks and McDonald’s have seen lacklustre results, missing analysts’ expectations. Both companies have significantly increased their gross profit margins, resulting in lower forward earning multiples compared to pre-Covid levels.

Walmart’s steady profit margin of 24% has contributed to its continued success, with forward earning multiples higher than competitors like Starbucks and McDonald’s. The company’s strategic focus on offering a wide range of products appeals to consumers and sets it apart in the retail market.



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