Walmart emerged as one of the few lifelines to millions of people as the coronavirus spread, leading to surging profit and sales for the world’s largest retailer. Online sales in the U.S. jumped 74% for its fiscal first quarter that ended April 30, which captured the brunt of the pandemic’s outbreak. Same-store sales rose 10% at U.S. Walmart stores on strong sales of food, health, and wellness goods.
At a time when a huge swath of stores that sell non-essential merchandise temporarily shut down, Walmart has the natural advantage of carrying the very items that consumers need during a pandemic. The company said it absorbed about $900 million in additional costs related to Covid-19, including raising wages for warehouse workers and paying bonuses to its store staff. It also hired 235,000 new hourly workers to help it staff stores. However, Walmart still reported a higher operating profit for the period.
Overall, Walmart’s global revenue rose 8.6% to $134.62 billion and net income rose 4% to $4 billion. Excluding gains on its investment in China’s JD.com earnings per share were $1.18, slightly better than Wall Street was expecting. Shares rose 1% to $128.95 in early Tuesday trading. The stock has gained nearly 30% from a year ago and is hovering near a record of $132.33 reached last month.
Executives said the company was withdrawing its financial forecasts for the rest of its fiscal year, citing the uncertainty and restrictions caused by the virus. However, they said the company was well positioned to operate through the crisis and Walmart has benefited from bricks-and-mortar closures and slowing shipping speeds at some online players. “It is a big advantage being an omnichannel retailer and I think that is showing right now. We had backups in our fulfillment centers too” but were able to quickly use stores to fill online orders, Walmart finance chief Brett Biggs said in an interview. “That is something that our competitors, they can’t all do it.”
Walmart said the number of new customers trying its online grocery pickup and delivery services grew fourfold since mid-March. Some of those shoppers will go back to old habits, Mr. Biggs said but “I think this time people are going to remember who was really there for them.”
Todd Horwitz Chief Strategist BubbaTrading.com
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