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Walmart CEO John Furner said Wednesday that rising fuel costs are placing increasing pressure on consumers, with lower-income households showing growing signs of financial strain.
Speaking to reporters during Walmart’s shareholder week in Bentonville, Arkansas, Furner said the retailer continues to attract higher-income shoppers, who are visiting stores more frequently and spending more. At the same time, Walmart is seeing evidence that lower-income customers are becoming more cautious with their spending.
“We do continue to see the higher-income customers coming to Walmart,” Furner said. “We’re meeting more of them, they’re buying more, they’re coming more frequently. … And then we’ve seen some more signs of stress at the lower income levels.”
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One indicator comes from Walmart-owned Sam’s Club. According to Furner, Sam’s Club members are averaging about 9.8 gallons per fuel purchase, while filling up more often, suggesting shoppers are managing their budgets as gas prices remain elevated.
“That’s really the stress point — is the price of fuel,” Furner said.
Despite those challenges, Furner said Walmart remains well-positioned to serve customers through its broad merchandise assortment and low-price strategy.
“Walmart’s set up really well in any kind of economy,” he noted.
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During the most recent quarter, the retailer rolled back prices on roughly 7,200 items, an increase from a year ago.
“I think we’ve done a really good job keeping our prices low in the quarter,” Furner said. “We had 7,200 rollbacks, that’s up from a year ago. We did that while maintaining and growing our gross margin.”
The comments came during Walmart’s annual shareholder week, which draws executives, investors and media to Northwest Arkansas each year.
U.S. consumer confidence dipped slightly in May as concerns about rising gas prices and inflation outweighed growing optimism about the labor market, according to Reuters. The reading, however, came in above economists’ expectations, providing some balance to the otherwise cautious consumer outlook.
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Last month, Walmart warned that higher fuel costs could add pressure on shoppers, particularly as the temporary boost from tax refunds fades and inflation continues to outpace wage growth.
“I think higher tax returns muted some of the pressure related to higher fuel prices and as we’re in a period of time right now where those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices,” Walmart CFO John David Rainey told CNBC following the company’s first-quarter earnings report.
“It’s something that we’re keeping a close eye on,” he added.
FOX Business’ Kristen Altus and Reuters contributed to this report.
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