When Walmart coughs…
The sheer size of Walmart, which also operates Sam’s Club, makes it a unique barometer of the American consumer. When Walmart execs talk about a trend, economists listen. That’s why the company's warning last week, in which CFO John Rainey forecast weaker spending going into the holiday season, was taken seriously. The fact that consumers continue to feel price sensitive, having endured inflation for much of the last 2 years, is perhaps no surprise.
With more bargain-seeking shoppers walking its aisles than any other retailer, Walmart only gets to stay in business by being hyper-competitive on price. But, despite its gargantuan economies of scale, the retailer ekes out a surprisingly small sliver of profit on its sales, reporting just a 2.2% net profit margin so far this year.
Of course, there’s no need to get your violins out for Walmart shareholders any time soon, because when you sell as much Walmart does, even a 2.2% margin shakes out to a not-so-slim$10.6bn in profit — and that's just for the first 9 months of its latest fiscal year.
