Walmart makes the big-box retail business look easy. The Arkansas-based retailer long known as a discount store has not only retained its budget-hunting customer, but it’s now also going after the wealthier crowd of competitors Target and Amazon.
The company reported 6% revenue growth to $161.5 billion and a comparable sales growth of 3.8% in its first quarter Thursday, which it said was driven by upper-income shoppers. Walmart was so optimistic it raised its outlook for growth to 4% from 3% for the year and expects adjusted earnings to be $2.37 per share, up from $2.23.
“We are seeing customers trade into Walmart,” Chief Financial Officer John David Rainey told Bloomberg on Thursday. “We’ve historically been thought of for value, but now it’s value, quality and convenience.”
Walmart attributed its growth to its 21% surge in e-commerce revenue, led by curbside pick-up and delivery orders—a service typically favored by wealthier consumers looking for convenience. It also gained market share in groceries as consumers continue to stray from discretionary purchases in favor of just buying the essentials.
Customers making over $100,000 have contributed the most to Walmart’s market share takeover, according to analyst Neil Saunders of GlobalData, and the retailer’s strategies of late reflect its desire to keep that the case. In April, Walmart announced the release of the premium own-brand food line bettergoods, with a focus on bright packaging and plant-based items to appeal to Gen Z and bougie shoppers. Earlier this year the retailer remodeled and revamped 800 locations, stocking wider shelves with $50 silk sleep masks and $230 duck breast. The company plans to remodel 900 stores in 2024, CEO Doug McMillon said in the company’s earnings presentation.
These tactics are on top of its consistent discount efforts, which McMillon said have been key to Walmart continuing to resonate with its consumer base—particularly as consumer sentiment reaches a six-month low despite cooling inflation—and have kept analysts upbeat on the company.
“Despite a volatile consumer spending backdrop, increased concerns on the health of the low-end consumer, and the relative resiliency of shares of [Walmart], we approach its [first quarter] print with optimism,” Deutsche Bank analyst Krisztina Katai wrote.
Clawing at retail’s top dog
While Walmart has moved to appeal to higher-income consumers, historically…
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