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Walmart is 'positioned to win' in the holiday shopping season: Analyst

UBS US Hardline & Broadline and Food Retail Analyst Michael Lasser joins Yahoo Finance Live to discuss Walmart's plan to hire 40,000 extra workers for the holidays and how the retailer is more prepared than others in the space for the upcoming shopping season.

Video Transcript

RACHELLE AKUFFO: Well, shifting gears now to Walmart announcing today it plans to add 40,000 workers this holiday season. Now that's far fewer than the 150,000 that it announced last year. Well, joining us now is UBS broadline and food retail analyst Michael Lasser. So Michael, what's your take on Walmart's hiring strategy at the moment?

MICHAEL LASSER: My take on Walmart's hiring strategy is that they're being prudent for the holiday. There's a lot of uncertainty with the consumer. Also, keep in mind a lot of the sales gains that have been driven throughout retail and Walmart have been due to inflation, rather than transactions. So when you're seeing increases in the amount spend per transaction or amount spent per consumer, you don't need as much labor to process those transactions.

Also, Walmart has been investing in more technology to increase the efficiency of its existing workers. So Walmart's being prudent with how it's going about it for the holiday season.

SEANA SMITH: Michael, how do you think Walmart is set up really heading into the holiday season? You mentioned the fact, obviously, inflation, higher prices. In terms of guidance there, sales are expected to rise in the current quarter and the fourth quarter. A lot of that, though, tied to those higher prices. How do they stack up maybe against some of their other competitors out there?

MICHAEL LASSER: I think Walmart's going to do very well during the holiday season. They've been seeing some consumers who typically don't shop at Walmart that come from more affluent households trade down because of all the well documented macroeconomic pressures.

And I think Walmart believes it has the right to win more wallet share with those consumers. It also has a lot of tools at its disposal to gain more wallets here, like Walmart Plus can be aggressive on price. It's got a lot of inventory. And so I think Walmart is positioned to win over the holiday season.

DAVE BRIGGS: And beyond that, the Fed Chair today talked about it being very challenging to accomplish that soft landing. So if it is a recession, what are the implications for a retailer like Walmart?

MICHAEL LASSER: The implication of a recession for a retailer like Walmart is that it's going to benefit. There's no better way for a consumer to stretch a dollar through lower prices than going to Walmart. And so the most likely case is that while a lot of retailers are feeling the pressure from that into 2023, Walmart seeing a benefit from a more difficult economic environment.

Also, in a more challenging overall retail landscape, it's likely that there's going to be more consolidation. The marginal retailers are going to maybe have a difficult time surviving. That would leave more share for Walmart to gain. And in any of those scenarios, a tough environment is good for Walmart.

DAVE BRIGGS: Michael, who might not survive?

MICHAEL LASSER: Well, there's a lot of retailers that are experiencing challenges right now. We have a sale on Bed, Bath & Beyond. Its sales have been declining at a 20% clip. And so Walmart is well positioned to gain share, given the proximity of its stores to a retailer like Bed, Bath & Beyond.

RACHELLE AKUFFO: And I wanted to ask you. Obviously, inventory issues have been a problem for retailers. How do you think Walmart is faring with that? And also this sort of foray into banking that Walmart is heading towards.

MICHAEL LASSER: So we think Walmart is just, with its foray into other categories like banking, healthcare, opening its e-commerce website to other merchants, it's looking to tap deeper into other profit pools and do more with its existing customer base. On its inventory position, it's been managing through this over the last couple of quarters. I think it's going to be aggressive with general merchandise, areas like consumer electronics, home furnishings, apparel, during the holiday season.

Because it's seen a tradedown from some more affluent consumers, those consumers also have more money to spend. They're coming in. They're buying consumables like food and household products. And we think that they're going to offer aggressive deals to try and sell those consumers the general merchandise as well.

RACHELLE AKUFFO: All right, a big thank you there to UBS broadline and food retail--

MICHAEL LASSER: Thank you.

RACHELLE AKUFFO: --analyst Michael Lasser. Thank you so much for joining us.