Walmart is betting against the middle class — and it's a brilliant strategy (WMT)

pulse

November 16, 2017 10:46 PM

Investors are rallying around Walmart's strategy of targeting shoppers at both the highest and lowest ends of the income spectrum.

Walmart's stock price soared to an all-time high Thursday following an upbeat earnings report.
It's a sign of growing investor confidence around the company's strategy of targeting customers at the highest and lowest ends of the income spectrum.

Walmart is on a tear.

The company's stock soared more than 10% on Thursday following an upbeat earnings report, which included 2.7% same-store sales growth at US stores, heading into the critical holiday season. Analysts applauded the company's performance across the board, with Gordon Haskett analyst Chuck Grom declaring it a "monster quarter" in which Walmart "hit it out of the park."

The rally appears to be more than a reaction to strong sales and earnings growth, however.

It's also a sign of growing investor confidence in Walmart's strategy to attract new customers by targeting shoppers at both the highest and lowest ends of the income spectrum, according to Doug Stephens

high-income customers , and the more recently announced addition of Lord & Taylor to Walmart.com.

At the same time, Walmart appears to be maintaining loyalty among customers at the opposite end of the income spectrum by keeping prices competitive and adding new in-store discounts that its rivals — most notably Amazon — will have a hard time beating.

Walmart's strategy puts less emphasis than ever before on a group that was once it's prime target: the middle class, according to Stephens.

"In the 1960s, rages were growing, families were growing, and people were moving out to the suburbs. That played very well into Walmart's playbook."

f Walmart is going to succeed they need to attract higher-income consumers."

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