Americans rediscovering the finest things in life when it comes to food has left Walmart (WMT) with a sour taste in its mouth.
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Posh Nosh
According to a new research report from Scott Marks, analyst at Jefferies, demand for premium food during June helped boost sales at rival Amazon’s (AMZN) Whole Foods stores. However, it was less fruitful news for Sprouts Farmer Market (SFM) which experienced a slight deceleration.
The Jefferies report added that grocery sales generally did well with Target (TGT) declines “easing further” and Walmart and Kroger (KR) seeing growth acceleration.
There was less good cheer for Walmart, however, with Sam’s Club suffering as discount demand slid during the month.
Walmart’s stock dropped 0.6% given the importance of grocery to the company’s overall revenue.
Further, Target’s app downloads and app usage metrics got worse in June, leading it to hold on to its rankings near the bottom of retailers on both fronts.
Inflation Challenge
Returning to Kroger, Jefferies said new management at the company had helped “increase focus on the consumer and efficiency” including in its e-commerce channels.
The figures come at an important time for the U.S. consumer who is being battered by higher inflation and general concerns over the state of the domestic and global economy. A lot of this pressure has come from President Trump’s tariff policies forcing retailers like Walmart – known for its focus on value – to hike prices.
It may come as a surprise then to Walmart that consumers are now instead flocking to premium sellers like Whole Foods, rather than discount. But with inflation once more on the rise it could be a different picture in July.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 28 Buy ratings. Its highest price target is $120. WMT’s stock consensus price target is $111.33 implying a 16.85% upside.
