BENTONVILLE, Arkansas: Even as it raised its forecast for sales and profits for the current year, this week, Walmart said U.S. consumers are more cautious with spending ahead of the holiday season gets underway.

Shares in the largest U.S. retailer fell 7.7 percent this week, with executives blaming higher interest rates and declining household savings for "somewhat uneven" sales over the past two months.

With more than half of the company's products comprising of food and other daily essentials, Walmart's bigger focus on groceries has provided a bulwark against the overall spending slowdown.

In an interview with Reuters, Walmart's Chief Financial Officer John David Rainey said in the second half of October, the company saw shoppers' purchases slow down, but they rebounded in early November on items such as apparel and home goods, which have been out of favor for most of the year.

"This gives us reason to think slightly more cautiously about the consumer versus 90 days ago," Rainey said.

"While shopper visits rose 3.5 percent in the third quarter, shoppers are still very selective and using discretion and are waiting for promotional events like Black Friday and Cyber Monday," he added.

Consumer spending accounts for some 70 percent of the U.S. economy, but due to higher borrowing costs and sticky inflation, core U.S. retail sales rose just 0.2 percent in October.

Since March 2022, the U.S. Federal Reserve has raised short-term lending rates by more than five percentage points, affecting consumer lending and mortgage rates, which are also higher.

In addition to Walmart, retailers Children's Place and Bath & Body Works also reported mixed quarterly results this week. Macy's M.N had strong results.

In a note, D.A. Davidson analyst Michael Baker said, "With this type of volatility, we think it does make sense for Walmart to be slightly more cautious on the consumer heading into the holiday season."