Walmart Crushes Q1 2025 Earnings, Fueled by Discount Strategy and Elevated Experience

Unstoppable Momentum

Walmart, the retail behemoth, has once again demonstrated its prowess in the industry by delivering a remarkable first-quarter performance for the fiscal year 2025. The company’s Q1 2025 earnings report, released on May 16, exceeded expectations across various major categories, thanks in part to its deep discount rollback program.

Doug McMillon, the esteemed CEO of Walmart, expressed his delight at the company’s strong results, stating, “Our results were stronger than we anticipated, with sales growth of 5.7% and adjusted operating profit up 12.9% in constant currency. All three operating segments performed well.”

Prioritizing the Consumer Experience

While the numbers undoubtedly paint a positive picture, Walmart has been equally focused on enhancing the qualitative aspects of its business. McMillon highlighted, “Second, we have the selection people are looking for…The e-commerce penetration is up in all our markets. Third, we’re improving the experience of shopping with us. Our store remodels look good and are performing well. Plus, our curbside pickup and delivery capabilities are improving, as indicated by our customer experience metrics.”

The Power of Pricing

Walmart’s success can be attributed, in part, to its ability to leverage its pricing power effectively. Known for its deep discounts and price competitiveness, Walmart has consistently offered lower-than-average prices across a wide range of products, from food to craft supplies. This strategy has not only kept customers streaming through the doors but has also fostered brand trust and loyalty.

Addressing concerns about inflation’s impact, McMillon emphasized, “The momentum we see across the business is driven by growth in units sold and transaction counts, as well as market share gains, including in grocery.” He further added, “In the U.S., like-for-like sales inflation was about 40 basis points for the quarter, including mid-single-digit deflation in general merchandise and low single-digit inflation in food and consumables. Together with our suppliers, we’re making progress lowering prices. Our rollback count is up, and customers are responding to our price leadership.”

Elevating the Shopping Experience

While low prices remain Walmart’s north star, the retailer has also invested significant resources to enhance the overall shopping experience for its customers. Over the past couple of years, Walmart has invested over $9 billion to update and renovate over 1,400 stores across the United States, with more renovations planned for the future. These efforts aim to create a more pleasant and enjoyable shopping environment for customers.

Additionally, Walmart has introduced new, upscale, and trendy brands to cater to customers with deeper pockets or more discretionary income. McMillon highlighted the recent launch of bettergoods, a new private brand in food, stating, “It’s our largest food private brand release in 20 years. The brand focuses on today’s trends and premium quality. But at the same time, 70% of bettergoods items are priced under $5.”

Attracting Higher-Income Customers

Walmart’s strategic moves have paid off, as the company has witnessed a significant surge in higher-income customers. CFO John Rainey revealed, “We’re seeing customers trade into Walmart. Higher income customers accounted for the biggest jump in e-commerce sales this quarter, at a 22% rise.”

Rainey further elaborated, “We’re seeing higher engagement across income cohorts, with upper-income households continuing to account for the majority of the share gains.”

As Walmart continues to navigate the retail landscape, its commitment to offering unbeatable value, coupled with an elevated shopping experience, has proven to be a winning formula, attracting customers across all income levels and solidifying its position as a retail powerhouse.