Food inflation looks to be coming down

Investors are dealing with a bout of Walmart (WMT) jitters.

Shares of Walmart (WMT) seesawed on Thursday following below-consensus outlooks for the first quarter and full year. The company’s stock dropped in early trading before reversing losses.

The company checked a lot of boxes for the bulls. Operating profits grew faster than sales at all of Walmart’s business segments. E-commerce sales rose by double-digit percentages at Walmart US and Sam’s Club.

And the retail behemoth uncorked a new $30 billion stock buyback plan.

Walmart CFO John David Rainey told me on Yahoo Finance (video above) that the company’s outlook leans toward conservative and the business remains healthy.

Importantly, he is starting to see inflation cool, opening the door to potentially stronger sales trends this spring once shoppers get their tax refund checks.

“Food is the area right now that I would say is probably most likely to be certainly disinflationary, but maybe even deflationary,” Rainey said. “Egg prices have come down appreciably from where they were a year ago … So we’re continuing to look to see that food prices could come down. And it’s really important for us because fresh as an item in produce is something that’s a basket driver. We see that when someone’s buying fresh in our stores, baskets tend to be about 25% higher. So that level of engagement and that additional level of spend is really important to our bottom line.”

• Net sales: $190.7 billion, up 5.6% from the prior year, vs. $190.6 billion estimate

• Adjusted earnings per share: $0.74, up 12.1% from the prior year, vs. $0.73 estimate

• Walmart US comparable sales growth: +4.2% vs. +4.3% estimate

• Walmart US e-commerce sales growth: +27% vs. +19.8% estimate

• Sam’s Club US comparable sales growth: +4% vs. +4.4% estimate

• Sam’s Club e-commerce sales growth: +23% vs. +15% estimate

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.

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