Walmart CEO Says Gas Prices are "Stress Point" for Consumers. Should You Buy the Stock?
Written by Ben Gran for The Motley Fool -> Walmart has made strides in attracting higher-income shoppers, but many of its customers are sensitive to higher gas prices. The company CFO recently told investors that Walmart customers are buying less than 10 gallons of gas at a tim
Walmart has made strides in attracting higher-income shoppers, but many of its customers are sensitive to higher gas prices.
The company CFO recently told investors that Walmart customers are buying less than 10 gallons of gas at a time.
Higher fuel prices from the Iran war have caused pain throughout the global economy. No one likes paying more money at the pump. Higher gasoline and diesel prices raise prices for everyone by driving up costs of business inventory, supplies, delivery, and freight shipping. But higher gas prices hit especially hard for lower-income people.
The world's largest retailer, Walmart (NASDAQ: WMT) , could be especially vulnerable to higher gas prices. Its customer base tends to be lower-income households. If Walmart shoppers are forced to burn up more of their hard-earned dollars in their gas tanks, this could reduce their consumer discretionary spending.
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According to Bloomberg, Walmart CEO John Furner said Wednesday that fuel prices are becoming "the stress point" for U.S. households. Walmart shares have gained about 5% year to date, underperforming the S&P 500 index.
Let's see if this retail stock is worth buying, or if investors should steer clear.
During the company's most recent quarterly earnings call on May 21, Walmart Chief Financial Officer John David Rainey said that while Walmart's higher-income customers are "spending with confidence," the lower-income customers are "more budget conscious and perhaps navigating financial distress."
