Walmart Defies Inflation Fears and Keeps the Discounts Rolling
Despite prices rising throughout the country in almost every sector, Walmart is refusing to succumb to inflationary pressures and has instead decided to offer more discounts with its Rollbacks program.
In an earnings call on Tuesday, U.S. CEO John Furner said that the store had about 30% more discounts in the first quarter than the same period a year ago. “Over the last 12 months, we saw our price gaps improve versus the market, and our merchants are working hard to ensure that that will continue” he stated.
Walmart offers sales, called “Rollbacks,” throughout the center aisles in its stores. Reduced prices are offered on items from diapers and toilet paper to lawn equipment and gardening soil. Rollbacks are added and changed constantly and are placed on large signs as a way to entice customers.
During the early months of the pandemic, Walmart and other grocers largely pulled promotions as they struggled to keep inventory on shelves, CNBC reports. They add that Walmart is refusing to raise prices and instead of pulling inventory like apparel, is adding more discounts to attract customers to its stores as Americans return to normalcy and start buying things like clothes and other merchandise again.
Wall Street watch site Seeking Alpha states that Walmart has benefited from strong demand during the pandemic as Americans stocked up on groceries and other goods. They add that the company’s profits and sales grew in the 12 months that ended January 2021, but costs have risen as the retailer has boosted wages and made other investments.
Walmart said in February that it would be raising minimum pay to $15.25 an hour for many U.S. West and East Coast workers where the cost of living was higher and the competition for workers more intense, according to Reuters.
At the time Walmart also stated it had seen a slight increase in job applications for digital and stocking roles, mostly from employees who already worked there. Drew Holler, Walmart’s head of people operations, said that this signaled that Walmart was becoming competitive for this type of work, Reuters added.
This, coupled with Walmart’s refusal to give into inflationary pressures seen throughout the rest of the market, are likely what contributed to Walmart beating its earnings estimates yesterday.
Walmart reported first-quarter earnings reports yesterday that surged past Wall Street’s expectations, with e-commerce sales up 37%, and raised its outlook for the year.
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