Walmart boosts outlook after strong quarter, shares surge 7%

US retailer Walmart raised its sales and profit forecasts on Thursday for the second time this year, as Americans kept flocking to its stores for inexpensive essentials, sending its shares up more than 7 per cent in premarket trading.

The world’s largest retailer by sales is among the first major US chains to report quarterly results that could provide insight into how consumers are feeling, particularly after the government reported an unexpected deterioration in the labor market, raising fears of a recession.

Still, consumer spending has remained resilient this year, bolstered by higher wages and low unemployment. US consumer prices fell for the first time in four years in June, offering some relief to Americans struggling with steep prices for meat, toilet paper and packaged food. Data released on Wednesday by the Labor Department showed inflation continues to moderate.

Due to its heft in grocery, Walmart is insulated from some of the pressures in the macro economy. The Bentonville, Arkansas-based chain accounts for $1 of every $5 spent on groceries on the United States, according to UBS analyst Michael Lasser. Walmart also generates about 70 per cent of its nearly $650 billion in annual sales from selling everyday items such as vegetables, fruits, toilet paper, soap and chocolate.

Walmart’s reputation as a destination for value shoppers has expanded, thanks to store and merchandise upgrades and investments in curbside pickup and delivery.

These investments helped it gain market share across several income-categories, led by upper-income households.

• Business