Walmart WMT released its first-quarter earnings results before the market opened on May 19.
The retail giant posted impressive earnings and revenue, beating Wall Street’s estimates. Due to the pandemic and shelter-at-home orders, e-commerce sales got a boost, thereby pushing the company’s overall results up.
Snapshot of the quarter
Walmart reported adjusted earnings per share of $1.18. Analysts had predicted earnings of $1.12 per share. Revenue grew 8.6% to $134.62 billion, which surpassed expectations of $132.80 billion.
Same-store sales grew 10% on the back of strong grocery sales. This was also more than the 8.6% growth analysts were anticipating. While the number of transactions plunged 5.6%, the average ticket price rose 16.5%.
“As a result of the health crisis and related stay-at-home mandates, customers consolidated store shopping trips with larger average baskets and shifted more purchases to ecommerce,” the company said.
E-commerce sales surged 74% in the U.S., fuelled by online grocery pickup and delivery service as well as robust grocery sales.
Walmart’s response to the pandemic
As a result of the pandemic, customers often refrained from going to the physical stores, which is why digital traffic and curbside pickup gained momentum during the quarter.
The retailer spent approximately $900 million in response to the pandemic. Nearly 75% of the amount was attributed to employee bonuses and expanded benefits.
In order to keep pace with the growing demand, the company hired 200,000 employees across its stores, clubs and distribution centers.
Phasing out Jet.com
Shifting gears, the company said it is planning to phase out Jet.com, its U.S. e-commerce company. The company acquired Jet in September 2016 in a deal valued at $3.3 billion.
“Due to continued strength of the Walmart .com brand, the company will discontinue Jet.com,” Walmart said. The company acknowledged that the acquisition was “critical to accelerating its Omni strategy.”
Guidance
Walmart did not provide fiscal year 2021 guidance. Brett Biggs, the company’s chief financial officer, commented:
“The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID-19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence.”
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
- Key Takeaways From VF Corp's 4th-Quarter Results
- Cisco's 3rd-Quarter Earnings and Revenue Surpass Projections
- Overview of Toyota's 4th-Quarter Results
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
