Egg Prices and Walmart's Grocery Revenue: A Correlation Analysis

The recent surge in egg prices has been a significant driver of inflation, with consumers feeling the pinch at the grocery store. As one of the largest retailers in the United States, Walmart has not been immune to the impact of rising egg prices on its grocery revenue. This article will explore the correlation between egg prices and Walmart's grocery revenue, examining the factors contributing to the increase in egg prices and the retailer's response to these fluctuations.



Factors Contributing to the Increase in Egg Prices

The primary factors contributing to the increase in egg prices are:

1. Avian Flu: The avian flu outbreak has led to the death or culling of millions of egg-laying hens, significantly reducing the supply of eggs. This has resulted in a 3% decrease in the U.S. total number of hens compared to the year before, leading to record-high egg prices and widespread shortages (Source: Editor's note).
2. Increased Demand: There has been a cultural shift towards more protein-heavy diets, driving demand for eggs and setting a higher base for demand (Source: David Anderson, Texas A&M University).
3. Inflation and Profit Mongering: Food prices have risen over 13% since last year, with many food companies taking advantage of the situation to raise prices and reap huge profits. Walmart and Kroger, which account for almost 40% of all grocery sales, have leveraged higher prices and profits to pay out billions in dividends to shareholders (Source: Study on food price increases).

Impact on Walmart's Grocery Revenue

These factors have influenced Walmart's grocery revenue in the following ways:

1. Increased Sales: Despite the price increases, consumer demand for eggs remains firm, leading to increased sales for Walmart. The retailer's U.S. grocery segment saw mid-single-digit growth during the fourth quarter of fiscal year 2025 (Source: Walmart's earnings presentation).
2. Limited Supply: The avian flu outbreak has led to supply constraints, with retailers rationing eggs to ensure more customers can have access to them. Walmart has limited purchases of 60-count cartons to two per purchase (Source: Walmart spokesperson).
3. Potential Impact on Profits: While the increased sales may contribute to Walmart's overall profits, the retailer may also face challenges in maintaining its profit margins due to the higher costs of eggs and other groceries. Walmart's gross profit margin was 24.81% in the first quarter of 2024, compared to 23.5% in 2023 (Source: Statista).



Walmart's Response to Egg Price Fluctuations

Walmart's pricing strategy and inventory management have been significantly impacted by the fluctuations in egg prices, particularly due to the avian flu outbreak. Here's how Walmart has responded and the impact on its overall grocery revenue:

1. Pricing Strategy:
- Walmart has been working with suppliers to keep prices as low as possible despite the tight supply (Source: Walmart spokesperson).
- The retailer has not imposed a company-wide cap on egg purchases, but some stores may have limits in place, such as in Hawaii for Target and two per item at Sam's Club (Source: Target and Sam's Club spokespeople).
- Walmart has been selling conventional shelled eggs "at or below our cost" to limit the impact of rising egg prices on customers, as seen in Giant Eagle's approach (Source: Giant Eagle spokesperson).

2. Inventory Management:
- Walmart has been rationing eggs to ensure more customers can have access to them. For instance, Walmart is curtailing purchases of 60-count cartons to two per purchase (Source: Walmart spokesperson).
- The retailer is working with suppliers to try and help meet customer demand while striving to keep prices as low as possible (Source: Walmart spokesperson).



In conclusion, the recent surge in egg prices has had a significant impact on Walmart's grocery revenue, with the retailer facing challenges in maintaining its profit margins and managing inventory. Despite these challenges, Walmart has been able to maintain strong overall grocery revenue by focusing on keeping prices low and maintaining availability. As the egg market continues to fluctuate, Walmart will need to remain adaptable and responsive to the changing landscape to continue its success in the grocery sector.