Newscasts - Walmart outlook strong but risks remain, says portfolio manager
21/08/2025 21:50
Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_n6st4ir3&referenceId=tag:reuters.com,2025:newsml_RW886221082025RP1_930&pageId=Newscasts Source: 'Reuters - Business videos' Description: Chris Carey, VP and portfolio manager at Carnegie Investment Counsel, says Walmart's earnings paint a "pretty good picture," but he flagged looming tariff costs and weaker low-income spending as concerns. Short Link: https://refini.tv/473OD3i Video Transcript: With Walmart's earnings this morning, it was overall a pretty good picture, but there were some areas that do leave a bit of cause for concern. Overall, the positives are that Walmart still raised their guidance with regards to being more profitable for the rest of the fiscal year and they raised their revenues. Their online services business still grew double digits. However, we do see two things that I would say raise our eyebrows. The first is that tariff-related costs are being pushed onto the consumer. That was something that management raised and that they are- it's kind of a blend of passing someone to the consumer and absorbing some themselves. So, it's good to see that even despite absorbing some costs that they were able to boost their forecast towards the end of the year. The second point, which I think is more of a systemic thing that we're seeing, not just with regards to Walmart, is that the top 20% or so of consumers within the United States are the ones that are really driving a lot of the consumer spending. Lower-income and middle-income households are definitely starting to cut back. They're, in some cases within Walmart, trading down in terms of the item quality, like from "premium brand" to "name brand", or even reducing the amount that the quantity of goods that they are consuming. We've also seen, for instance, with quick service restaurants, that fast food, foot traffic has been falling too, as Americans are kind of coming to the opinion that it's cheaper to eat in than to eat out really. So, it's definitely something that we want to keep an eye on as time goes on.