Why Walmart Is More Optimistic About 2023 Than Target

Walmart CEO Doug McMillon released first quarter earnings and spoke with investors 24 hours after Target
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CEO Brian Cornell gave his first quarter report. But in terms of their outlook for the future the two CEOs sounded like they were lightyears apart.

While Target reported flat sales and warned that a wave of violent store theft will hurt profits this year by an expected half a billion dollars, Walmart
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reported revenue and U.S. comp sales gains of more than 7% and was upbeat about its ability to meet any challenges.

Walmart executives on their conference call with analysts and investors sounded a theme they have voiced previously: When times are tough, its a great time to be Walmart.

“We feel like we’re in a position to outperform and to continue to outperform because of the work that’s been done to date and our ability to manage the business and pivot as we need to looking forward,” McMillion told Walmart investors.

Walmart executives said they are seeing strong gains from investments they have made, and will continue to make, in improving their online operations, in-store pickup and delivery, and by broadening their business operations with Walmart Marketplace for third-party vendors, and by growing its advertising platforms.

They also believe they are gaining share from competitors, particularly in grocery, and luring more higher-income shoppers into their stores with their competitive pricing on the staples most impacted by inflation.

“Share gains in grocery continued, including from higher income households, as our strong price gaps resonate with customers who are increasingly prioritizing value and convenience,” Walmart Chief Financial Officer John David Rainey said on the call.

Walmart is also seeing market share gains in general merchandise, Rainey said.

Walmart’s stock was up just over 2% as of 11 a.m. today, while Target’s stock was down just over 2%.

Walmart increased its guidance for the full year, saying it expects net sales to grow by 3.5% and operating income to be up 4 to 4.5%, with adjusted earnings of $6.10 to $6.20 per share.

Rainey noted that it is unusual for Walmart to change its guidance after releasing first quarter results. “But we think in this unique environment it’s important to provide an ongoing framework as our views evolve,” Rainey said.

While other retails are citing the current unique environment as a reason to be cautious with their guidance, Walmart believes it could be a competitive advantage.