Walmart flexes as retail gets choppy

As shoppers get thrifty, Walmart is flexing its muscles.

Like other retailers, the company faces slowing sales as the boom of pandemic-fueled spending fades and inflation hits shoppers’ wallets.

Yet, unlike many competitors, Walmart has a few key factors that could work in its favor: Most of its sales come from food, a category that shoppers need in any economy. It has built its reputation on offering low prices. And its huge reach allows Walmart to make money in other ways, including selling ads, offering delivery services and fulfilling online orders for third-party sellers.

Walmart CEO Doug McMillon acknowledged the challenging retail backdrop on the company’s earnings call in February. Yet he said its business is “naturally hedged.”

“If customers want more of something and less of something else, we shift our inventory,” he said. “If the economy is strong, our customers have more money and that’s great. If things are tougher, they come to us for value.”

The retailer’s top leaders will share the company’s strategy for the year Tuesday and Wednesday at an investor event in Tampa, Florida.

Here’s a closer look at some key themes for Walmart that could emerge at the investor event:

As the nation’s largest retailer, Walmart is a bellwether for both the sector and the U.S. economy. Investors are hungry for any fresh consumer clues.

“You always start a Walmart meeting by asking how the consumer is doing because they really have the best pulse on what is going on with the American consumer and how they are spending,” said David Silverman, a retail analyst at Fitch Ratings.

Walmart has already noticed changes in buying patterns. In the past few quarters, Chief Financial Officer John David Rainey told CNBC that its shoppers have bought more private-label products and opted for cheaper proteins like peanut butter and hot dogs. Plus, he said as customers spend more on groceries and other essentials, they are buying less general merchandise — a shift that’s shaking up Walmart’s sales mix and hitting sales at other retailers, including Target.

Walmart shared a cautious outlook for the year, factoring in economic uncertainty and shoppers’ more discerning approach. It said it expects same-store sales for Walmart U.S. will increase between 2% and 2.5% excluding fuel, in the fiscal year ahead. The company projects that adjusted earnings per share for the fiscal year will range from $5.90 to $6.05, excluding fuel.

That would be a decline from the past fiscal year, when same-store sales grew 6.6% for Walmart U.S. and adjusted earnings per share were $6.29, excluding fuel.

Advertising. Delivery services. Picking and packing items for third-party sellers.

Walmart has taken a page from its chief rival, Amazon, as it sells services and technology, along with socks and gallons of milk. It is expected to provide a progress report at the investor event.

The company has a growing number…