(CNN) — Walmart on Tuesday offered a much rosier picture for consumer spending than it had forecast just a month earlier, as the company’s steep discounts led customers to shop more at stores.
Sales were up 9%, excluding the impact of the change in exchange rates, last quarter.
Walmart recently announced it would cut prices on some non-essential goods, such as clothing and some big ticket items due to an excess of inventory from that shift in spending. That led Walmart last month to slash its profit outlook, warning that inflationary pressures forced consumers to spend more on essentials, such as food, and less on discretionary purchases.
But the mega retailer managed to outperform Wall Street’s profit expectations, despite inflation and changes to consumer spending habits.
The company reported adjusted earnings per share of $1.77, down only 1 cent from what it earned on that basis a year earlier. Analysts surveyed by Refinitiv had forecast earnings to fall to $1.62 a share.
Walmart continues to expect earnings will fall in the second half of the year, but it predicted a smaller drop in profit going forward than it had previously expected.
“We’re pleased to see more customers choosing Walmart during this inflationary period, and we’re working hard to support them as they prioritize their spending,” said Doug McMillon, Walmart’s CEO, in a statement. “The actions we’ve taken to improve inventory levels in the US, along with a heavier mix of sales in grocery, put pressure on profit margin for [the second quarter] and our outlook for the year.”
Shares of Walmart gained 3% in premarket trading on the news.
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