Food Retail State-Weighted Scanner Analysis

Research evidence excerpt

Food Retail State-Weighted Scanner Analysis

first ~7

wks) driven by volume -2.1% (-1.7% through first ~7 wks) and price +0.9% (+1.2% through first ~7 wks).

Adjusting for the historical spread implies core grocery sales running down -2.0%, which paired with our

+2% pharmacy growth estimate implies F1Q ID sales tracking down -1.5% (guidance below low-end of

~flat to +1%). We note that mgmt’s implied guidance for a slowdown in F1Q is primarily related to the

pharmacy business and assumes industry trends remain soft, but largely unchanged q/q. Data implies

grocery has gotten softer as well.

Walmart U.S. (~94% correlation to grocery net sales) – Tool implies decel q/q, but at odds w/ recent

mgmt comments: This week's release gives us a full look at WMT's quarter. Food channel $ sales

throughout WMT regions in 1Q were down -1.6% (-1.8% through first 12 wks). The result is being driven

by volume -2.9% (-3.1% through 12 wks), partially offset by price +1.5% (+1.5% through 12 wks). This

reads somewhat concerning, especially given rising gas prices and lower SNAP penetration y/y, but

WMT CFO, John David Rainey, sounded constructive at an investor event on 4/8. More specifically,

he suggested that tax refunds were having a bigger benefit than initially anticipated/contemplated in

guidance and that the Company holds a more constructive view on the consumer than headlines imply.

For F1Q, we model Walmart US comp sales +4.0% (cons. +3.9%) with grocery comp +4.0% (4Q +MSD)

led by +0.8% food inflation (4Q +0.6-0.7%). We assume general merchandise comp accelerates modestly

to +3.5% (4Q +LSD) on an easy compare (F1Q’26 down slightly) and higher tax refunds y/y. Through 5/1,

total tax refunds were up +18% y/y, resulting in an extra $49.5B circulating throughout the economy.