What: Walmart’s shares fell last year following the realization that US consumers are acting more cautious than ever.

Why it is important: After 2 years of splurging in shopping, the US customer mood might change, but the timing is not the best, 3 weeks before Christmas. Expect some market changes as well.

Walmart has observed cautious consumer spending as the holiday season approaches, even though it has raised its sales and profit forecast for the year. The company's focus on groceries has helped mitigate the impact of reduced discretionary spending. However, Walmart's CFO noted a slowdown in purchases in late October, followed by a rebound in early November in categories like apparel and home goods. The company is preparing for a potentially less robust holiday season, reflecting the broader retail industry's sentiment.

Economic factors like higher interest rates and reduced household savings have led to uneven sales. U.S. retail sales have only marginally increased, and wholesale food inflation is showing signs of easing. Walmart's strategy of maintaining low prices has attracted a broader customer base, including high-income consumers seeking budget-friendly options. The company plans to offer price cuts for the holiday season, despite general merchandise prices falling by 3-6%.

Walmart's shares fell 7.7% on the announcement, although they had recently reached an all-time high. The company has updated its fiscal 2024 earnings forecast and now expects a higher rise in comparable sales than previously estimated. Online sales have also increased by 15%. Walmart's performance, including a higher-than-expected adjusted profit in the third quarter, reflects its adaptability in a challenging economic environment.

Walmart sees customers becoming increasingly worried