Walmart CEO Doug McMillon Admits Consumer Spending Trend Tougher to Predict in 2024 as Shoppers Spend Cautiously

By Jace Dela Cruz

Dec 07, 2023 12:45 AM EST

Walmart CEO Doug McMillon has expressed a cautious outlook on consumer spending in 2024, emphasizing uncertainties surrounding shoppers' purchasing power amid higher credit card balances and shrinking household bank accounts. 

During an interview on CNBC's "Squawk on the Street" aired Wednesday, McMillon acknowledged the difficulty of predicting sales trends in the coming months following the peak holiday shopping season.

(Photo : ROBYN BECK/AFP via Getty Images)
The Walmart logo is seen outside a Walmart store in Burbank, California on August 15, 2022. - Walmart, the largest retailer the United States, will report second quarter earnings on August 16, 2022

Walmart CEO Doug McMillon Talks About Unexpected Resilience of Consumers

Reflecting on this year's higher credit card balances and decreasing household bank accounts, Doug McMillon said these instances raise questions on how much consumers will spend even after exhibiting more resilience than expected this year.

He cautioned that the landscape might shift in the coming year, introducing new challenges and considerations for retailers. One notable factor influencing Walmart's current strategy is deflation in some products.

McMillon noted that prices in general merchandise, which includes electronics, toys, and other non-food items, dropped by roughly 5% compared to last year.

While prices in food categories have remained relatively stable compared to the previous year, McMillon emphasized the fluctuation in fresh food prices.

The CEO pointed out that the company has observed a rebound in the volume of non-food sales, with back-to-school shopping contributing to this recovery.

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What's Next for Walmart?

Looking ahead, Doug McMillon anticipated the dynamics in general merchandise categories to be particularly interesting due to the significant price drop. 

Despite the challenges posed by deflation, he expressed confidence in Walmart's ability to drive growth, emphasizing the company's preference for lower prices over higher ones.

Despite a lower-than-expected full-year forecast in November, Walmart projected sales growth, expecting consolidated net sales to rise by 5% to 5.5% and adjusted earnings per share to be between $6.40 and $6.48 for the fiscal year.

However, the prospect of deflation poses challenges for retailers, requiring them to work harder to increase sales volume as prices decline. McMillon acknowledged these challenges but affirmed Walmart's commitment to navigating the retail landscape, even in an environment marked by falling prices. 

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