Can Walmart Sustain Gains Among Higher-Income Customers?

Walmart Inc. WMT is broadening its appeal beyond value-focused consumers as higher-income households respond to its mix of low prices, convenience and wider product selection. The sustainability of these gains will depend on whether those shoppers continue using Walmart across more categories and shopping occasions.

The first quarter of fiscal 2027 showed further progress. Walmart U.S. recorded broad-based share gains across categories and income tiers, led by upper-income households. Comparable sales rose 4.1%, driven by a 3% increase in transactions and a 1.1% rise in the average ticket.

Digital convenience is supporting that engagement. Walmart U.S. e-commerce sales advanced 26%, while store-fulfilled delivery grew about 45%. Nearly 36% of store-fulfilled orders were delivered in less than three hours, and Walmart can now reach about 60% of the U.S. population within 30 minutes.

A broader assortment is also helping attract higher-income customers. U.S. marketplace net sales increased nearly 50%, aided by greater engagement from higher-income households. Fashion posted its strongest share growth in five years, while expanded offerings supported results in patio and garden, sporting goods, furniture and toys.

While higher tax refunds may have supported some general merchandise demand during the quarter, Walmart’s combination of value, delivery speed and assortment breadth gives it several ways to stay relevant to higher-income shoppers. Sustained transaction growth and continued strength in marketplace and general merchandise would indicate that these customers are becoming a more consistent part of Walmart’s business.

What Do the Latest Metrics Say About Walmart?

Walmart, which competes with Costco Wholesale Corporation COST and Target Corporation TGT, has seen its shares rally 12.2% over the past year compared with the industry’s 10.1% growth. Shares of Costco have climbed 0.3%, while Target has gained 28.5% in the aforementioned period.

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From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 35.6, higher than the industry’s 32.49. The company is trading at a premium to Target (with a forward 12-month P/E ratio of 15.88) while trading at a discount to Costco (41.93). 

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The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings per share implies year-over-year growth of 5.2% and 9.5%, respectively. 

Walmart currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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