Walmart Relying on Advertising Growth as Retail Sales Slow
As Walmart's retail sales growth slows, the company is increasingly turning to its advertising business for higher-margin revenue. U.S. same-store sales rose by 4.1% in the quarter ended April 30, down from a consistent rate of about 4.5% over previous quarters. Meanwhile, Walmart Connect saw a significant jump with 44% growth during the period—the fastest since it began reporting separately in early 2023. Walmart's advertising platform benefits from its expanding membership program and access to customer data that improves ad targeting. Analysts anticipate continued strong performance for Walmart Connect when results are released later this week, though U.S. same-store sales growth is expected to dip below 4% for the first time since early 2024. Walmart's advertising business contributes roughly one-third of its operating income despite being much smaller than overall retail revenue. The company also sees AI as a potential avenue for further expansion, testing ads within Sparky, an AI shopping assistant.
Topics: advertising growth consumer behavior same-store sales Walmart