American consumers want to get out and shop, putting their stimulus checks to good use.
That's according to Walmart Inc. (WMT, Financial) President and CEO Doug McMillon following the release of the company's first-quarter financial results. He said:
"This was a strong quarter. Every segment performed well, and we're encouraged by traffic and grocery market share trends. Our optimism is higher than it was at the beginning of the year. In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and e-commerce continues to grow. Stimulus in the U.S. had an impact, and the second half has more uncertainty than a typical year. We anticipate continued pent-up demand throughout 2021."
The retail giant's total revenue reached $138.3 billion, an increase of $3.7 billion, or 2.7%. That included a 37% gain in online sales. Comp sales increased 6% as the company gained market share in its grocery business. Operating income increased 26.8%.
Wall Street liked Walmart's financial results, sending its shares higher during regular trading hours.
The retail giant's strong results shake off fears that the company has become too big to grow. They also prove that its strategy to fend off Amazon's (AMZN, Financial) challenge has been working. However, the brick-and-mortar retailer has a long way to go before it catches up with the online retailer in critical financial performance metrics:
| Company | Walmart | Amazon |
| Three-year Revenue Growth (%) | 5.7 | 45.2 |
| Three-year EBITDA Growth (%) | 8.7 | 89.5 |
| Current Operating Margin (%) | 4.03 | 6.63 |
| Average Annual Total Return (2010-20) | 13.71 | 34.75 |
| Market Price | $144.4 | $3,270.4 |
| Intrinsic Value | $124.41 | $3,438.4 |
| Company | ROIC | WACC | ROIC-WACC (Economic profit) |
| Walmart | 8.14% | 3.44% | 4.70% |
| Amazon | 11.37% | 9.48% | 1.89% |
Walmart has spent a great deal of money recruiting software developers and acquiring online retailers to expand its e-commerce scale and scope to match Amazon's pricing and convenience.
The company has also leveraged its extensive network to speed up online orders by shipping from its stores rather than from remote warehouses, as has been the case with Amazon.
Providing shoppers with the choice to place orders online and pick up merchandise at local stores also helps customers save time and avoid shipping fees. This trend could accelerate as the economy opens up.
The bottom line is Walmart has proven it can survive and thrive in any market environment.
Disclosure: No positions.
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