10AM Hour 5/21/26

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Sara Eisen (0:59)

Good Thursday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. Ahead this hour, can't miss interview with NVIDIA CEO Jensen Wong. After last night's results, his thoughts on the hyperscalers competing with Amazon, supply chain concerns, and much more all ahead. Plus, we'll talk about the major IPO news as Elon Musk's SpaceX officially files with the SEC for the world's largest listing. And the CEO of Stellantis is with us as the Jeep maker lays out his turnaround plan to investors. But we'll start with Walmart, one of the stocks of the day, the retail giant beating on first-quarter revenue and reporting earnings in line with expectations. The stock though is falling pretty hard here after the company issued cautious guidance and cited higher fuel prices. Joining us now first on CNBC is Walmart's CFO, John David Rainey. John David, thank you for taking the time this morning to speak with us.

John David Rainey (1:53)

Good morning, Sara. It's good to be here.

Sara Eisen (1:55)

So as I mentioned, revenue looked good and earnings on track. It was operating income. Looks like it got impacted by fuel prices. How big of an issue is that?

John David Rainey (2:06)

Well, let me start with the quarter was good for us. We drew the top line on a reported basis of about 7 percent, EPS grew 8 percent. We did see some margin pressure on operating income growth. We guided 4 to 6 percent. We came in a little bit above the midpoint of that. We had about 250 basis points of pressure related to fuel. Since we gave the guidance 90 days ago, all the events that have led to the higher fuel prices have occurred.

We had to navigate that in the quarter. But I think very importantly, Sara, our guidance for 2Q is 7 to 10 percent operating income growth. We reaffirmed our guidance for the year. That's indicating that we think we have the ability to navigate this environment of higher fuel prices pretty well.

Sara Eisen (2:46)

What about the consumer? Does the consumer have the ability to navigate the higher fuel prices? You capture all income spectrums, including the low income which has felt the most pain. What are you seeing there?

John David Rainey (2:59)

Increasingly, it depends upon what consumer you're talking about. We see that among our customer base, the high income customer continues to spend with confidence in many categories. Whereas the lower income consumer is a little more budget conscious, even navigating some financial distress. Since we gave the guidance 90 days ago, as I mentioned, we've seen fuel prices increase, and so it stands to reason that incrementally from 90 days ago, there's a little more pressure on the consumer. This narrative around the K-shaped economy, we see that in our business as well. One of the things that we monitor is the year-over-year change in spending between high income, median income, and low income consumers. That gap has continued to widen as we've gone through the last couple quarters between the high income and the low income. And I'll give you one data point here. When we look at our business, obviously we sell a lot of fuel in the United States. The average gallons that a consumer is filling up with has fallen below 10 gallons. It's the first time this happened since 2022 So it does show that there's a little bit of pressure on the consumer right now.

John David, a lot of work is being done on SNAP, people who were enrolled in states like Georgia and Arizona and Florida. I mean, hundreds of thousands of people falling off the roles of food assistance. Is that weighing on results too?