Walmart Flexes Its Scale to Power Through Pandemic--Update
August 18 2020 - 8:50AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. 's quarterly sales surged as the retail behemoth
continued to use its scale, e-commerce supply chain and grocery
business to attract shoppers buying food and household goods during
the coronavirus pandemic.
The company's e-commerce business nearly doubled, jumping 97%
from a year ago, boosted by people ordering groceries online to
pick up in store parking lots. Walmart expanded the availability of
delivery and pickup time slots this year in response to the health
crisis.
Comparable U.S. sales, those at stores or digital channels
operating for at least 12 months, rose 9.3% in the quarter ended
July 31. It marks the second consecutive quarter of strong growth
and evidence that the world's largest retailer is grabbing market
share as many retailers close stores or declare bankruptcy amid
coronavirus struggles.
In the April quarter Walmart's comparable U.S. sales grew 10%
and Wall Street was expecting growth of 5.9% for the July quarter,
according to estimates compiled by FactSet.
U.S. traffic fell 14% in the July quarter, while the average
amount spent per transaction jumped 27%. In the U.S. "customers
continued to consolidate store shopping trips," spending more per
trip, the company said in a release, "and shifted more purchases to
e-commerce."
Walmart said sales were boosted by government stimulus spending,
which lifted demand for general merchandise such as electronics,
patio furniture, sporting goods and even apparel, a category with
weak sales at the start of the pandemic. As the government funds
tapered off, sales started to return to more normal levels in the
month of July, the company said.
Net income was $6.48 billion, compared with $3.61 billion a year
ago. The latest period included a large investment gain. Excluding
gains and one-time charges, Walmart said it had adjusted earnings
of $1.56 cents a share. On that basis, analysts were expecting
$1.25 a share, according to FactSet.
Also on Tuesday, Home Depot Inc. said comparable sales rose a
record 23.4% in the quarter ended Aug. 2, as more people spend more
time at home, sprucing up the house with remodeling and decorating
projects. Meanwhile, Kohl's Corp. reported total revenue fell 23%
as it worked to reopen its department stores.
Many already weakened retailers have buckled under the pressure
of the pandemic. Several department stores and specialty retailers
have filed for bankruptcy protection with plans to close many
stores, including Lord & Taylor, J.C. Penney Co. and Stage
Stores Inc. Last week, off-price chain Stein Mart Inc. filed for
chapter 11 with plans to close most of its roughly 280 stores.
Along with Amazon.com Inc., Walmart, Home Depot and other large
retailers have been coronavirus winners. They have significant
online businesses or have largely stayed open, have been deemed
essential retailers by local governments and sell goods that align
with quickly shifting buying habits. Shoppers are spending more on
cooking at home, fixing up homes and family entertainment, while
spending less on restaurants, travel and office-ready fashion.
Target Corp. and home-improvement retailer Lowe's Cos. report
quarterly results Wednesday.
But as retailers approach the busy holiday season, the economic
outlook is unclear. Supplemental unemployment benefits ended last
month for tens of millions of Americans and are set to restart at
reduced levels.
Walmart's business model aligns well with many
coronavirus-related forces. Already the country's biggest seller of
groceries, Walmart has invested heavily to offer curbside pickup or
home delivery from hundreds more stores. Those services had
all-time high sales volumes in the quarter, the company said. The
retailer, which touts low prices, typically grows sales when the
economy falters, according to analysts. And Walmart sells
everything from lettuce to underwear and vacuums, making it a
convenient one-stop shop for shoppers limiting their time in public
spaces for health reasons.
Early in the pandemic Walmart struggled to keep shelves stocked
as shoppers panic-bought toilet paper, cleaning supplies and food.
Over a hundred thousand workers were on coronavirus-related leave
in April. The retailer rushed to quickly hire enough staff to keep
up. Inventory strain has stabilized somewhat, but Walmart is still
facing above normal out-of-stock product rates, it said Tuesday.
U.S. inventory levels were 4.6% below year-ago levels.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
August 18, 2020 08:35 ET (12:35 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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