Customers shop at a Walmart store on May 18, 2023 in Chicago, Illinois.
Scott Olson | fake images
Actions of Walmart hit an all-time high on Friday, as investors bet the discounter will outperform its retail rivals and attract shoppers during the holiday season because of its reputation for value.
Shares of the big-box retailer hit a high of $166.30 earlier in the day. That marks the highest level since Walmart began trading on the New York Stock Exchange in August 1972.
Walmart, known for its giant stores and low prices, has delivered strong results over the past year even as American consumers have stopped making discretionary purchases like new clothes, flat-screen TVs and more. It is the country’s largest grocer and makes more than half of its annual revenue from groceries, a category shoppers need even when inflation or a recession stretches their budgets.
That business has helped Walmart attract foot traffic, even as other retailers like it Macy’s and Aim give cautious outlooks and see weaker results.
For Walmart, persistent inflation, particularly in categories such as food and household necessities, has also become an opportunity to attract new or less frequent shoppers to its website and stores. In calls with CNBC over the past few quarters, Chief Financial Officer John David Rainey said the company has attracted more grocery buyers from households making more than $100,000.
As those shoppers visit its stores and website, they see ways Walmart has tried to improve the customer experience to keep up with more polished, tech-savvy rivals like Target and Amazon. The company has launched and expanded fashion clothing brands. It has revamped its website and app. It is investing more than $9 billion over the next two years to upgrade its stores across the country and give them a modern look. And it has added more high-end items and brands to its website through its third-party marketplace.
Walmart has also challenged another dynamic in the retail industry. As gains from the Covid pandemic fade and most companies report declines in online sales, it has posted double-digit e-commerce gains for its US business over the past two quarters.
In an interview with CNBC in August, Rainey said Walmart can attract customers with its prices, but it wants to beat its competitors and retain those shoppers by making shopping quick and easy. Curbside pickup and delivery have fueled the company’s e-commerce growth, he said.
“It really shows that Walmart’s value proposition is much more than low prices or value. Today it’s convenience,” Rainey said. “And so we’re leaning heavily on that and really both aspects of this part of our business.”
As the company outperforms many of its peers, some investors have taken notice. So far this year, Walmart shares are up almost more than 16%. That beats gains of more than 13% for the S&P 500 and gains of about 3% for the retail-focused ETF, XRT, over the same period.
Walmart is scheduled to report its fiscal third-quarter results on November 16.
—CNBC Christopher Hayes contributed to this story.
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