Inflation, labor shortages, and a supply chain slowdown? They’ve got nothing on the world’s largest retailer.
In its third quarter earnings report, Walmart posted a 9.2% year over year sales growth in US stores open for at least a year. After posting earnings and revenue that beat analysts expectations, the company raised its full-year outlook and now predicts U.S. sales above 6% for the year.
Walmart’s sales last quarter benefitted from higher prices in an inflationary environment as well as government stimulus payments.
In grocery, sales were up almost 10% largely thanks to byproducts of inflation. Consumer prices rose by 6.2% in October compared to a year ago, according to the Bureau of Labor Statistics’ monthly report, which marked the highest inflation rate since the 12-month period ending in November 1990.
Walmart executives said the retailer has flexibility when it comes to distributing higher prices across categories, which allows for competitive yet profitable pricing.
“The purpose of the company is to save people money and help them live a better life, and we get excited about trying to do that,” Walmart CEO Doug McMillon said in a call with investors. “It becomes a mix management exercise with us trying to manage serving the customer member well [and] managing the bottom line.”
It helps that Walmart’s inventory is up 11.5% in Q3. In general, Walmart made early investments to help get it through the supply chain crisis, such as securing product early and chartering vessels to prepare for Q3 and Q4.
Watch on FN
Walmart also saw hiring gains amid a widespread retail industry labor shortage.
685,0000 people quit their retail jobs in September, representing a quit rate of 4.4%. While this number was down from the 721,000 retail workers who left their jobs in August, mass quitting is still exacerbating existing labor shortages across the industry as stores look to staff up for the holidays.
Walmart, which has been offering competitive wages to attract talent, defied the labor shortage trend and added over 200,000 new associates in the last quarter, executives said in a call with investors. 25% of these new hires are in supply chain roles and the rest are working in store roles.
Earlier this year, Walmart said that it would pay supply chain associates an average wage of $20.37 per hour as it loooked to hire 150,000 new U.S. store associates and 20,000 supply chain roles across more than 250 Walmart and Sam’s Club distribution centers, fulfillment centers, and transportation offices.
According to McMillon, the difficult hiring situation changed for Walmart once stimulus payments ended.
“We saw people come back,” he said in a call with investors. “In a matter of weeks, we were back to being staffed.”
