WMT Walmart Inc

By Sarah Nassauer 

Walmart Inc. reported strong holiday sales and said it would raise wages for about 425,000 of its employees after a year in which the Covid-19 pandemic boosted its business.

U.S. comparable sales, or those from stores and digital channels operating for at least 12 months, rose 8.6% in the quarter ended Jan. 29, an acceleration from the third quarter, when sales climbed 6.4%, and higher than most analysts' forecasts. U.S. e-commerce sales, which include online grocery orders, increased 69% from a year earlier.

The country's largest private employer said it would raise pay for U.S. workers to an average above $15 an hour. Its minimum starting wage for U.S. workers will remain at $11 an hour.

The pay raises will be for store workers in digital and stocking roles, said Walmart U.S. Chief Executive John Furner. That targets roles that have been especially important during the pandemic, including workers that gather products from store shelves for online orders picked up in parking lots or delivered to homes. Walmart has worked to keep shelves stocked as shoppers stockpile certain items such as food and cleaning supplies.

"We saw major changes to customer behavior last year we believe will be lasting, and we have to continue working to stay in-stock, deliver items on time and provide the best omni experience possible," said Mr. Furner.

Starting March 13, pay for workers in those roles will move up to $13 to $19 an hour, based on a store's location.

Rivals Amazon.com Inc. and Target Corp. have made $15 an hour their starting wage for all workers. The Biden administration and Congress are considering raising the federal minimum wage from $7.25 an hour.

Walmart CEO Doug McMillon has previously said the company believes the federal minimum wage should go up, but that $15 was too high for some regions and businesses.

Sales rose during the fourth quarter due to strong holiday shopping, with an additional boost when U.S. stimulus checks arrived in January, Walmart said. Food sales went up as the quarter progressed, the company said.

Adjusted per-share earnings hit $1.39 during the quarter, lower than the $1.51 analysts expected, according to FactSet. Walmart spent around $1.1 billion in the quarter on Covid-19-related expenses such as increased pay and benefits. The expense was partially offset by reduced travel and professional service costs, the company said.

Walmart said it expects lower profits and slower growth in the new fiscal year. It forecast U.S. comparable sales would rise by a low-single-digit percentage, compared with 8.6% growth in fiscal 2021. Walmart, like many other businesses during the pandemic, had stopped giving financial guidance in recent quarters.

After surging last year, the company's stock fell 4.5% in premarket trading Thursday.

Like recent quarters at Walmart, the number of shopper trips declined but the average each spent per visit went up. Some shoppers have avoided stores for health reasons, but are making the most of each trip. During the most recent quarter, U.S. visits declined 10.9%, while the average amount spent went up 21.9%.

Walmart, the country's largest retailer by revenue, has generally fared well throughout the pandemic, rushing to fill shelves when shoppers stockpiled early in the pandemic, then benefiting as a drop in restaurant meals led more people to cook at home and stock up on home goods and kids entertainment. Unlike many retail competitors that were struggling before the pandemic hit, Walmart had already invested heavily in e-commerce, including online-order parking-lot pickup, a service that has grown in popularity as more shoppers avoid stores for health reasons.

Walmart's total revenue reached a record $152.1 billion in the fourth quarter, an increase of 10.3% from a year ago, and its operating income increased 3% to $5.5 billion. The company reported a quarterly net loss of $2.1 billion, reflecting hefty losses tied to the pending sales of its U.K. and Japanese operations.

Retailers have reported mixed results over an unusual holiday season that started early and relied heavily on e-commerce sales. Amazon said quarterly sales jumped 44% to $125.6 billion, while Target's comparable sales in November and December rose 17% compared with last year.

Tapestry Inc., which owns the Coach and Kate Spade brands, said sales fell over the holidays due to less store traffic, while profits increased as it pulled back on discounts.

The Commerce Department reported that retail sales, which includes spending at restaurants and online, jumped a seasonally adjusted 5.3% in January from a month earlier. It was the strongest gain since last June, when the economy was in the process of reopening from pandemic-related closures.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

February 18, 2021 08:51 ET (13:51 GMT)

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