Walmart (WMT) stock was in the money today on reports that its sales are being boosted by high-income shoppers looking for value in these uncertain economic times.
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Michael Gunther, head of insights at Consumer Edge, took to the CNBC airwaves to state that value and discount retailers such as Walmart, Dollar General (DG) and Dollar Tree (DLTR) are benefiting from high-flyer business.
“They are seeing an outsize share of their new shoppers being those from a high income,” he said. “We’ve seen it in the latest quarter and into August. This is trade down. It is relative to their overall customer bases.”
All three of those stocks have already performed strongly this year – see below:
Gunther said that it could be that high-income consumers are “holding up better” than those with lower incomes because of higher asset prices. This, presumably, refers to property prices and investments such as stocks and shares.
Deal Seekers
Nevertheless, he argued that despite being in a better position they are still looking to manage their spending and looking for deals.
“They like the thrill of the hunt. It’s also an indication of the efforts these companies have put into attracting high-end consumers with expanded assortments,” he said.
Refurbished stores and faster e-commerce and home deliveries are also likely to have tempted more high-end demand to Walmart, at least.
“Luxury isn’t turning around. There is a middle ground where consumers are pushing back on these price increases,” he said.
Indeed, on pricing at Walmart and rival Target (TGT) he said increases to date have been “range-bound.” He added: “It’s not been broad-based yet. We will see if that continues to hold as inventories whittle down. But, overall spending is holding up relatively well. It’s better than feared.”
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 29 Buy ratings. Its highest price target is $127. WMT stock’s consensus price target is $114.07, implying an 11.72% upside.
