Walmart stock spikes as higher-income shoppers boost its grocery market share

Clear aisles, full carts, can’t lose… America’s largest retailer is seeing the bright side of dark times. Walmart shares spiked 7% yesterday to a six-month high after it delivered surprisingly strong quarterly sales (up 8%) and boosted its forecast. The MVP of earnings: groceries. Kitchen staples like canned beans and hot dogs carried the quarter.

• In the cart: Food was the fastest-growing category with double-digit sales growth as more shoppers turned to Walmart for its “everyday low prices.”
• In the storeroom: Discretionary items like TVs, air fryers, and clothing were weak. On the plus side, Walmart unloaded some of its excess inventory piles.
• Target, which reports today and is also a grocery go-to, could echo these trends.

$6 Hu chocolate to $1 Hershey’s… Americans are trading down. Walmart’s CFO said customers have been turning to less pricey protein sources like hot dogs, beans, and store-brand peanut butter. Tyson’s lackluster report this week confirmed that demand for premium beef and pork is dropping. But it’s not just lower-income customers trading down:

• More high-income customers turned to Walmart last quarter for cheaper groceries. 75% of its market-share gains in food came from households making $100K+.
• With grocery prices up 12% from a year ago, discount retailers like Dollar General and Grocery Outlet have also gained wealthier customers.
• It’s a theme: In its latest earnings, McDonald’s said it attracted more higher-income customers who opted for fast-food over pricier sit-down restaurants.