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.
What We Know:
- 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.
- Unlike its online rivals like Amazon, Walmart enjoys an extensive network of nearly 5,000 physical stores and a variety of delivery and pick-up options that it ramped up to meet crushing demand for essential items, from paper towels to canned food. Walmart’s reputation for low prices also helped as the unemployment rate has spiraled to the high level since the Great Depression.
- Walmart shoppers did not limit their purchases to just essential items, using their federal stimulus checks to buy clothing, TVs, and video games, which helped boost sales in April. Walmart also said it is seeing gains in new customers from across all income brackets.
- Cash bonuses were issued to all hourly workers and Walmart upped pay by $2 per hour at its warehouses. It rolled out an emergency leave policy and spent money on shields at check out lines. Still, it reported a higher operating profit.
- Before the pandemic, there was already a broadening gap between big box stores and mall-based chains that had struggled to follow customers online. The crisis has accelerated that trend, pushing clothing chins further into peril.
- The earnings picture is looking dismal for the fiscal first quarter. Home Depot and Kohl’s on Tuesday also joined Walmart to report the full impact of COVID-19 on financial operations and revealed the vast disparity between those allowed to keep their doors open during the outbreak, and those that were not.
- Kohl’s with its stores temporarily closed, swung to a $541 million loss and revenue tumbled more than 40%.
- Amazon reported last month soaring sales in the first three months of the year, but profits slumped 29% because of extra costs related to the pandemic like paying workers overtime to keep up with a surge in orders and disinfecting its vast warehouses where orders are packed and shipped.
- This month, Walmart launched Express Delivery, which gets orders to a customer’s home in less than two hours. The program has been tested in 100 stores since mid-April and will be expanded to nearly 2,000 stores in the following weeks.
- Walmart had a profit of $1.40 per share. Earnings, adjusted for non-recurring gains, were $1.18 per share. That exceeds the per-share earnings of $1.10 that Wall Street was looking for, according to a survey by Zacks Investment Research.
- Walmart shares fell $2.71, or 2.1%, to close at $124.95 Tuesday. Its stock is up 5% so far this year.
Walmart is one of the first major retailers to report on what happened as the virus gripped the United States. Others, like Macy’s were forced to close to curb the spread of the virus.