It looks like America’s largest retailer is in for a rocky 2023.
The company reported an 8.3% sales increase during its latest quarter at U.S. stores open for at least a year, but most of the holiday growth came from grocery sales as consumers purchased necessities over gifts.
The slowdown in sales for typical holiday buys like toys, electronics, and clothing suggests that consumers are more hesitant to open their wallets amid still-high inflation in 2023.
Additionally, uncertainty about the U.S. Federal Reserve’s decision to continue hiking borrowing costs complicates the forecast.
“Balance sheets are continuing to get thinner, savings rate is roughly half of what it was at a pre-pandemic level and we’ve not been in a situation like this where the Fed is raising at the rate that it does,” Walmart’s Chief Financial Officer, John David Rainey, told Reuters. “So, that makes us cautious on the economic outlook because we simply don’t know what we don’t know.”