Bank of America analyst Chris Nardone said Walmart will likely need to raise prices selectively to protect margins, after hosting Walmart CEO John Furner and investor relations senior vice president Steph Wissink for meetings in Boston. Nardone wrote that oil and diesel prices continue to rise, driving upward pressure on commodity costs, and that vendors are starting to increase prices. He noted that rollbacks across grocery and general merchandise peaked last quarter at 11k and should normalize to a lower number in the second half, which, combined with the egg deflation lap, is driving higher inflation expectations relative to earlier this year. The latest inflation readings show price pressures remain elevated: the August Consumer Price Index rose 3.4% from a year earlier, core CPI increased 2.9%, the Fed's preferred PCE gauge rose 3.4% year over year in August, and the August Producer Price Index rose 5.4% over the prior year. Walmart management described the consumer backdrop as stable, citing good back-to-school results and noting that the pronounced trade-down behavior seen during the 2022 oil shock has yet to materialize, aided by favorable wage growth and labor market conditions.
Walmart Inc.BofA warns Walmart will likely need to raise prices selectively to protect margins as rising oil/diesel and vendor costs pressure commodity costs.
Bank of America CorpBofA analyst Nardone hosted Walmart management and issued a note on Walmart's pricing/margin outlook; BofA itself is only the analyst source, not a subject of impact.
