Walmart says prices are falling — except in one key area | Real Time Headlines

Prices for many groceries and other items have dropped WalmartCEO Doug McMillon said.

However, the leader of the largest U.S. retailer said Thursday that inflation is “more stubborn” in one specific area of ​​stores: the aisles that hold dry goods and processed foods. This includes items such as carbonated soft drinks.

On a conference call after the discounter reported second-quarter earnings, he said Walmart has pressured suppliers on its shelves to lower prices. But he called on the companies to do more.

“We have less upward pressure, but some people are still talking about cost increases and we are fighting back aggressively because we think prices need to come down,” he said.

Walmart Chief Financial Officer John David Rainey told CNBC that overall inflation was flat this quarter and revenue growth came from selling more merchandise rather than charging higher prices. But price dynamics are inconsistent across products: Dairy products, eggs, sugar and meat prices continue to rise, while prices for products such as pet food, apples, potatoes, strawberries, sporting goods and lawn and garden supplies have leveled off or declined. .

Walmart’s quarterly results sparked gains in other retail stocks, including Target, best buy and macy’s department store Thursday. Results for large discount stores and Retail sales beat expectations Ignore consumer concerns about slowdown.

Walmart Beat the top and bottom lines And it raised its forecast to reflect strong performance in the first half. Rainey told CNBC that consumers remain “selective, discerning (and) value-driven,” but the company’s leaders “don’t see any additional harm to consumer health.”

All consumer brands, including Walmart, are included More reviews from shoppers and even politicians McMillon’s comments about Walmart suppliers underscore how much pressure grocers are facing as dissatisfaction over higher-priced items persists. Walmart painted Criticism of TikTok Launch of electronic price tags for store shelvesSome users believe the company will use the technology to increase prices when demand surges. (Walmart, for its part, said it has no plans to change its pricing and is adding new price tags to save store workers time.)

Many brands are taking pains to emphasize value or launch new offers, especially as consumers become more discerning about where they spend their money.

McDonald’sFor example, $5 value meal launched at the end of June and decided to expand the offer in most markets. Target stated for late May it will price reduction About 5,000 items that are frequently purchased throughout the summer, such as peanut butter, milk and meat.

Walmart is also on sale. The retailer said it had 7,200 “rollbacks” across categories in the quarter ended July 31, with food rollbacks up 35% year-on-year.

McMillon said that while Walmart’s profits grew faster than sales, that was due to growth in higher-margin businesses outside of retail, such as advertising, rather than rising commodity prices.

“We’re not going to raise prices. We’re going to lower prices,” McMillon said. “We don’t expect product margins to go up. When we talk about margin improvement as a company, we’re talking about the business mix.”