Walmart reported strong sales and profits for last quarter but said times would be tougher this year, a warning that consumers were starting to pull back as they felt the squeeze from relentlessly rising prices for everyday goods.
According to the New York Times, the retail giant’s revenue and profit grew more quickly than analysts expected for the three months through January, which includes the holiday shopping season, as consumers made more trips to its stores and spent more per visit than they did a year earlier.
But the company forecast more muted earnings for the current fiscal year than anticipated, spooking investors.
Doug McMillon, Walmart’s chief executive, told analysts on a call that the company was “optimistic that more higher income families will continue shopping with us.”
It was a similar story at Home Depot, which said profits would be slimmer this year. The retailer’s business is closely tied to the housing market, which has been increasingly shaky as mortgage rates have risen. Home Depot’s shares fell 7 percent on February 21st.
The results from Home Depot and Walmart suggested that the resilience of consumers might be starting to crack, as inflation and rising interest rates squeeze household budgets.
In another sign of rising cost pressures, Home Depot said that it would spend an extra $1 billion this year on raising pay for its frontline workers, including lifting its starting wage to $15 an hour. The company employs 475,000 people at more than 2,300 stores in the United States, Canada and Mexico.
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