(Yahoo!Finance) - Walmart (WMT) says shoppers' wallets are getting squeezed among stubbornly high food prices.
"If you look at the headline numbers, sure inflation is coming down because we're lapping higher prices last year. But if you're a consumer going to buy a basket of groceries, prices are still high," John Rainey, CFO of Walmart told Yahoo Finance Live (video above) following the retailer's latest quarterly results.
"Pocketbooks are pinched, and that's causing customers to be more discretionary with these larger ticket items, like electronics, TVs, home and apparel," he added.
Rainey points out food prices on a two year basis are up 20%.
"I think the persistent inflation in dry grocery and consumables is the biggest issue," he told analysts during the company's earnings call.
Walmart is seeing a continuation of trends in previous quarters, as more higher income and younger shoppers are buying at the low cost retailer. The company has been steadily gaining market share in its grocery segment as consumers aim to stretch their dollars.
"We're seeing trade downs in terms of buying less expensive meats, or instead of buying a pack of 12, they're buying a pack of 6. You can see that their wallets are being stretched more thinly," said Rainey.
Walmart's CFO points to elevated use of credit to buy goods as another sign of stress on shoppers.
"There's a lot that we don't know about the back half of the year, and we want to be prepared for any type of economic environment," said Rainey.
Walmart's net sales in the first quarter grew 7.6% year-over-year to $152.3 billion. The company said sales growth moderated as the quarter progressed.
"In addition to the persistence of inflation in food and consumables, customers were also impacted by a reduction of SNAP benefits and lower tax refunds," Rainey said during the company's earnings call.
Walmart shares were up 2% on Thursday. The stock is up more than 7% year-to-date.
By Ines Ferré · Markets Reporter
