Higher-income
consumers
may
be
creating
a
frothy
situation
at
Walmart.
Even
though
affluent
shoppers
helped
drive
the
retailer’s
latest
beat
on
quarterly
results,
former
Walmart
U.S.
CEO
Bill
Simon
warns
they’ll
be
hard
to
keep.
“The
Walmart
experience
is
better
than
it
used
to
be,
but
it’s
still
not
a
premium
experience.
Walmart
is
built
on
convenience,
cost
and
assortment.
Not
on
service,”
he
told
CNBC’s
“Fast
Money”
on
Thursday.
“As
the
economic
challenges
abate
…
service
will
become
more
important
than
convenience
and
price.
And,
we’ll
see
a
shift
back
of
some
of
the
consumers.
That’s
the
bubble.”
His
warning
comes
with
Walmart
stock
hitting
all-time
highs
going
back
to
August
1972,
when
it
began
trading
on
the
New
York
Stock
Exchange.
Shares
surged
almost
7%
on
Thursday
after
the
discount
retailer’s
fiscal
first-quarter
adjusted
earnings
and
revenue
beat
estimates.
Walmart
reported
high-income
consumers
helped
drive
profits
particularly
in
its
grocery
business.
“The
challenge
is
that
the
tail
winds
that
have
come
from
food
inflation
that
have
pushed
Walmart
along
will
reverse
eventually,”
said
Simon,
who
sits
on
the
boards
of
Darden
Restaurants
and
Hanesbrands.
Last
October
on
“Fast
Money,”
Simon
warned
bargains
were
losing
their
magic
because
consumers
were
starting
to
buckle
for
the
first
time
in
a
decade.
His
call
at
the
time
applied
to
lower-income
consumers.
Now,
Simon
contends
higher-income
consumers
going
to
Walmart
isn’t
good
news
for
the
broader
economy.
“When
money
is
tight,
people
react
—
even
high-end
consumers
react,”
he
said.
Despite
his
bubble
warning,
Simon
thinks
Walmart
is
a
“great
investment”
over
the
next
12
months.
“As
long
as
there’s
inflation
and
those
tail
winds
that
come
from
particularly
from
food
inflation,
more
traffic
will
come
to
the
Walmart
store,”
said
Simon.
But
he
thinks
the
stock
may
hit
a
rough
spot
in
24
months
as
inflation
comes
down
and
higher-end
consumers
move
away
from
shopping
at
discount
retailers.
“When
inflation
abates
and
service
becomes
more
important
than
price,
some
of
those
tail
winds
will
become
headwinds,”
Simon
said.
