CNN Business
Walmart had good news Tuesday for investors and economists worried about a looming recession, as the retail giant gave a much rosier picture of consumer spending than it offered less than a month ago.
On July 25, Walmart warned about its earnings for the rest of the year, saying that high fuel and food prices were prompting consumers to cut back on other spending, forcing the chain to cut prices on some non-essential goods, such as clothing, electronics and home goods. The earnings warning was seen as another sign of growing weakness for the economy overall.
But Tuesday the nation’s largest retailer said it got a good customer response from those price cuts last quarter. Although Walmart continues to expect earnings will fall in the second half of the year, it now predicts a smaller drop in profit going forward than it had previously expected. Earnings per share for the year are expected to drop 8% to 10%, excluding divestitures, but that’s better than the 10% to 12% drop it forecast on July 25.
“We’re pleased to see more customers choosing Walmart during this inflationary period,” said CEO Doug McMillon.
Since Walmart is the nation’s largest retailer, its results are watched not only as an indication of its own health, but as a measure of the strength of the US economy overall. The results Tuesday were another sign that, despite worrisome indicators of a possible recession in the months ahead, consumer spending remains strong. Walmart noted that it is so far seeing a strong back-to-school shopping season.