The CEO of Walmart, Doug McMillon, has expressed uncertainty about the outlook for sales in the months following the peak holiday shopping season. In an interview with CNBC’s “Squawk on the Street,” McMillon cited higher credit card balances and declining household bank accounts as factors that raise questions about consumer spending in the coming months.
While consumers have shown more resilience than expected this year, McMillon noted that deflation in some items is creating a new dynamic for Walmart. Prices in the general merchandise category, which includes electronics, toys, and other non-food items, have dropped by about 5% compared to a year ago. This holiday season, Walmart is offering 25 toy items under $25, including a Hot Wheels car for $1.18.
On the food front, prices in food categories are about where they were a year ago, though fresh foods tend to fluctuate. The company has also seen the volume of its non-food sales start to come back, with back-to-school season driving some of that rebound.
Despite the challenges that deflation may bring, McMillon remains confident that Walmart can drive growth, even in a lower price environment. He stated, “we’d rather have lower prices than higher prices,” suggesting that Walmart is prepared to navigate the current market conditions.
Walmart has stood apart from many other retailers over the past year, with its large grocery business and low-price reputation propping up its revenue and stock price. The company gave a lower-than-expected full-year forecast in November, but still projected sales growth, with consolidated net sales expected to rise 5% to 5.5%.
As the retail landscape continues to evolve, Walmart remains optimistic about its prospects, even in the face of deflation and uncertain consumer spending patterns.