Walmart's stock surged 72% over the past year, primarily due to strong operations, yet rising food prices threaten the margins critical to its earnings growth.
Walmart faced significant cost increases in grocery categories like coffee, oranges, beef, and eggs, which account for nearly 60% of its U.S. sales.
Despite a strong quarter where revenue rose by 5% and operating profit grew by 9.1%, Walmart's reliance on stable food prices poses risks.
The consumer price index's spike in 2022 was largely driven by food prices, and while a similar impact is unlikely in 2025, higher food costs could still hit Walmart's earnings.
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