(NewsNation) — Over the years, Walmart has traditionally attracted a lower-income crowd because of its discount pricing. But tough times are bringing thicker wallets through the retailer’s doors.
This was evidenced by Walmart’s quarterly report Tuesday, which beat analysts’ projections for this past fiscal second quarter, as revenue grew by more than 8 percent.
Walmart’s net income was more than $5 billion over the previous three months thanks to higher prices and a higher-earning clientele.
According to John David Rainey, Walmart’s CFO, more middle- and high-income shoppers are turning to Walmart, as evidenced by strong sales in their private-label products.
Consumers are showing they want more quality and less quantity.
“If you want to save money, come to Walmart. The meat is fresh, the cold cuts are fantastic. It’s comparable to Shoprite, only cheaper,” said Patrice Arguelles, who shops at Walmart regularly.
While inflation has caused consumers to hold back on some discretionary purchases, food has not been one of them, as more than half of Walmart’s U.S. revenue comes from grocery sales — even as grocery prices have increased more than 13% year-over-year.
Walmart reported double-digit sales growth in its grocery division — 3/4 of which comes from customers with annual household incomes of more than $100,000.
Categories such as apparel and electronics, however, have much larger margins than milk and eggs, and the retailer is still working through excess inventory by canceling billions in orders and discounting items as it tries to free up space for the upcoming holiday season.
Walmart’s Wall Street rally is a tide that raises all boats, with retail rival Target seeing its stock go up Tuesday as well, as investors prepare for the red brand’s quarterly results tomorrow.