Walmart Inc. (WMT, Financial) released its second-quarter earnings results before the market opened on Aug. 18. The retail giant posted impressive earnings and revenue, beating Wall Street's estimates.
Quarter Snapshot
Walmart recorded net income of $6.48 billion, translating to GAAP earnings per share of $2.27. The company reported adjusted EPS of $1.56. Analysts had predicted adjusted EPS of $1.25 per share. Revenue grew 5.6% year over year to $137.74 billion, which surpassed expectations of $135.48 billion.
Same-store sales grew 9.3% on the back of strong grocery sales. This was also more than the 5.4% growth analysts were anticipating. Barring fuel sales, comps grew approximately 10%.
While the number of transactions plunged 14%, the average ticket price rose 27%. Due to the pandemic and related stay-at-home orders, customers consolidated store shopping trips with larger average baskets and shifted more purchases to ecommerce, the company said.
E-commerce sales surged 97% in the U.S., fuelled by online grocery pickup and delivery service as well as robust grocery sales.
Covid-19 response
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 reported that it spent roughly $1.5 billion in response to the pandemic. In order to keep pace with the growing demand, the company hired more than 400,000 employees across its stores, clubs and distribution centers.
Sales of the general merchandise category, especially at the start of the quarter, got a boost thanks to government stimulus spending. Walmart's Chief Financial Officer Brett Biggs believes that another stimulus package can bolster the company's overall sales in the quarters ahead, given that majority of the Americans have spent a larger chunk of their stimulus checks. Biggs commented:
"Stimulus was definitely impactful to the consumer in the second quarter, and we're watching what's going on in Washington, and how we're going to progress with a new stimulus package. I think certainly it would be helpful for consumers."
Guidance
Walmart withdrew guidance for the second half of the year.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
- Key Takeaways From Tapestry's 4th-Quarter Results
- Performance Food Group Reports Mixed 4th-Quarter Results
- Highlights From Macerich's 2nd-Quarter Results
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
