While Walmart's earnings topped Wall Street expectations, CFO John David Rainey said that "many consumer pocketbooks are still stretched."
"We see the effect of that in our business specs as they're spending more of their paychecks on non-discretionary categories and less on general merchandise," Rainey told analysts on the first-quarter earnings call Thursday.
Rainey said that particular merchandise mix is still a headwind to margins, but Walmart U.S. is in the midst of executing strategies aimed at improving general merchandise sales and increasing the visibility of the e-commerce brand assortments in fashion, home and electronics, according to Rainey.
INFLATION INCREASES 3.4% IN APRIL AS PRICES REMAIN ELEVATED
"We have the opportunity to grow general merchandise sales in stores with our first party e-commerce assortment and especially with our marketplace," he said.
Walmart reported revenue of $161.51 billion for the three-month period ending April 30, beating analyst expectations of $159.5 billion. The Arkansas-based retailer also reported adjusted earnings of 60 cents per share, topping Wall Street's estimate of 52 cents.
In the midst of a year marked by uncertainty and persisting inflation, the company raised its full-year forecast.
WHY ARE GROCERIES STILL SO EXPENSIVE?
In April, inflation climbed 3.4% from the same time last year, down from the 3.5% reading in March. While inflation has fallen considerably from a peak of 9.1%, progress has largely flatlined since the summer. Inflation remains well above the Fed's 2% target.
In turn, it's created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. However, these price hikes are particularly devastating for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities.
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To help, Walmart CEO Doug McMillon said the company is working with suppliers to lower prices and its "rollback count is up."
Walmart U.S. CEO John Furner said the company has almost 7,000 rollbacks which the company noted is "resonating" with consumers. Rollbacks refer to temporary price reductions on goods.
FOX Business' Megan Henney contributed to this report.
