Online Shopping and Essential Goods Propel Walmart to Earnings Beat
Even as stores gradually reopen to the public and restrictions ease on nonessential businesses, shoppers are still turning to digital channels and stocking up on necessities — a trend that has helped propel Walmart Inc. to an earnings and sales beat.
For the second quarter, the Bentonville, Ark.-based retailer reported profits of $6.48 billion, or $2.27 per share, from last year’s $3.61 billion, or $1.26 per share. On an adjusted basis, earnings per share amounted to $1.56, handily topping analysts’ expectations of earnings of $1.25 per share. Revenues also advanced 5.6% to $137.7 billion, versus Wall Street’s bets of $135.37 billion.
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According to the company, its net sales were “significantly affected” by the ongoing COVID-19 health crisis, but increased demand for products across multiple categories drove its strong top-line results. Walmart’s comps in the United States rose 9.3%, led by consumer demand for general merchandise and food. What’s more, its e-commerce sales surged a whopping 97%.
“I want to give a big thank you to our associates for their tireless efforts during these unprecedented times. We also appreciate the trust and confidence of our customers,” president and CEO Doug McMillon said in a statement. “We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future.”
At Sam’s Club, comps improved 13.3%, while e-commerce spiked 39%. The chain posted the highest quarterly gains in more than five years in its membership income as its new member count grew upwards of 60%.
Internationally, Walmart’s sales declined 6.8% to $27.2 billion. Revenues, it said, were impacted by the government-mandated closure of its Flipkart business in India for a portion of the three-month period, as well as “similar actions” in its markets in Africa and Central America.
Due to its status as an essential retailer, Walmart has continued to operate its stores throughout the pandemic even in hard-hit states and localities. At the start of the coronavirus’ wave in the U.S., an influx of consumers turned to its locations across the country to collect household supplies and other essential goods, leading the company to hire hundreds of thousands of employees across its Walmart and Sam’s Club outposts and distribution centers.
However, last month, the company laid off hundreds of workers across its store planning, logistics, merchandising and real estate divisions. Although it did not specify the number of roles that were eliminated, its balance sheet reflected an impact of 10 cents per share in business restructuring costs.
As previously announced, Walmart did not offer an outlook for the rest of the fiscal year.
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