Doug McMillon steps down as Walmart CEO; John Farner named as successor
Doug McMillon will retire as Walmart’s CEO in 2026, and will be replaced by John Farner, head of the company’s U.S. division.
If there’s any place to get the American shopper, it’s Walmart.
With the Trump administration and Democrats blaming the economy, Walmart is positioned to make the most of the affordability crisis.
Sales at the largest U.S. retailer rose nearly 5% last quarter as shoppers worried about the economy and stressed by inflation visited stores more often and spent more. E-commerce sales also increased by more than 25% compared to the previous year.
On Thursday, Nov. 20, as other retailers like Target, Home Depot and Lowe’s lowered their profit estimates, Walmart also raised its sales numbers and issued a bullish outlook, hinting at a fun holiday season ahead.
It’s not alone. TJX Cos., which owns discount retail chains TJ Maxx, HomeGoods and Marshalls, also raised its full-year forecast and expressed optimism about the holiday season. Costco beat quarterly estimates in September amid bargain-hunting fueled by inflation.
More than anything, the story of this retail earnings season is the rise of the value shopper.
By keeping prices low, these retailers appeal to a wide range of shoppers, from wealthy households looking for bargains to low-income families struggling to make ends meet, as more Americans struggle to afford basic necessities like housing, utilities and groceries.
One in three people with six-figure incomes say they feel financially stressed, according to a New Harris poll. The top 10% of earners account for more than 49% of all consumer spending, the highest level in decades, according to research by Mark Zandi, chief economist at Moody’s Analytics.
Chief Financial Officer John David Rainey told CNBC that Walmart has a “value-driven” spending pattern. This pattern is being driven by middle-class and upper-income households looking to save money, as well as lower-income shoppers who are switching from Dollar General and other discount stores.
“It stands to reason that if consumers are burdened with any burden, they will be burdened even more and they will want more value,” Rainey said.
Chief Executive Officer Doug McMillon told analysts on an earnings call that low- and middle-income households had switched to cheaper alternatives. Executives also said that despite rising costs, Walmart will hold off on price hikes for as long as possible and instead absorb additional costs from tariffs.
Once again, Walmart has an advantage in delivering value to shoppers. It’s a grocery business. Of the 7,400 active price reductions, most of the reductions were related to food items.
From government shutdowns and delayed benefits to persistent inflation, the high cost of living has become the dominant narrative of American life.
It has also emerged as the biggest issue worrying voters. Inflation and the economy are now Americans’ top concerns, according to a CBS News poll.
As the pocketbook issue becomes a key factor in determining who takes power in Congress after next year’s midterm elections, the Trump administration announced plans to provide $2,000 checks to low- and middle-income Americans using revenue from tariffs.
Julie Craig, vice president of shopper insights, said Kantar’s monthly tracking data shows fewer shoppers are feeling positive about being able to purchase everyday essentials.
“This decline is seen across all income levels, including among higher-income shoppers. This suggests that among wealthier shoppers, there may not be as much segregation as we have seen in the past,” Craig said. “There is no doubt that shoppers want to get better at managing their budgets and avoid impulsive spending, with more than two-thirds of shoppers saying they will need to be more careful with their spending in the near future.”
Analysts say it’s not just the financial burden that is driving sales at Walmart and TJX. It’s a psychological thing.
“Now more than ever, consumers are clearly looking for value for money,” said Neil Saunders, managing director at GlobalData Retail. “Some of it is economic, because inflation is still a bit low, but there’s also some psychological, because there’s a lot of uncertainty surrounding the future of the economy. All of this is making people more conscious about their spending.”
