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, with revenue
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 about 30% since
February in response to the health crisis, said Walmart Chief
Financial Officer Brett Biggs on a call to discuss earnings.
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 in some categories 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.
"Our customers were spending so much more time at home that we
experienced strong sales in categories like TVs, computing and
connected home," CEO Doug McMillon said on a conference call. With
many restaurants facing restrictions, "families continue to prepare
more meals at home, and our business has benefited from that
trend."
Mr. McMillon said sales were hampered by out-of-stock items, and
there continues to be elevated demand for cleaning supplies and
paper goods. At times, he said, Walmart saw customers return to
stockpiling such items in virus hot spots. He said sales gains
slowed in July as government stimulus payments waned.
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.
Overall, Walmart reported its global revenue rose 5.6% to $137.7
billion, with gains in most of the countries where it operates. The
company spent $1.5 billion on Covid-related global expenses, mostly
on workers, but still increased profits. Operating profits rose
8.5% to $6.1 billion.
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 25% in the quarter ended Aug. 2, as more people spend more
time at home, sprucing up the house with remodeling and decorating
projects. Comparable sales growth remained strong in the first two
weeks of August, after the quarter ended, Home Depot executives
said.
"When customers have more money in their pocket, there's some
benefit to that. So we don't kid ourselves to think that that
didn't have some kind of impact," Home Depot CEO Craig Menear said
when asked about the impact of stimulus spending. Mr. Menear added
that the pandemic made it difficult to forecast how long heightened
demand would persist.
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.
Kohl's Corp. reported that total revenue fell 23% to $3.4
billion for the quarter ended Aug. 1. Kohl's CEO Michelle Gass said
sales rebounded in June, but tapered off again in July as the
coronavirus surged in parts of the country.
"Consumer behavior has been profoundly altered given safety and
spending concerns, and we don't expect this to change in the near
term," she said.
The retailer plans to add more athletic and casual clothes such
as the Lands' End and Toms Shoes brands, as well as boost its home
offerings to better align with what shoppers want to buy. Ms. Gass
said store closings by competitors are presenting Kohl's with an
opportunity to pick up new customers.
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.
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.
In the most recent quarter, "we saw stronger-than-expected sales
due in large part to stock-up buying and stimulus spending," said
Mr. Biggs, Walmart's CFO. "But the duration and extent of future
government stimulus remains uncertain."
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 of 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 higher than normal out-of-stock product rates, it said
Tuesday. U.S. inventory levels were 4.6% below year ago levels.
--Suzanne Kapner and Matt Grossman contributed to this
article.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
August 18, 2020 11:39 ET (15:39 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Walmart (NYSE:WMT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Walmart (NYSE:WMT)
Historical Stock Chart
From Jul 2023 to Jul 2024