Walmart Beats on Q1 Earnings as Online Sales Surge 74%

Walmart Beats on Q1 Earnings as Online Sales Surge 74%
May 20, 2020

 

Walmart Inc (NYSE: WMT) reported a profit for its fiscal 2021 first-quarter that rose from the comparable period last year. Both earnings and revenue surpassed analysts’ estimates. Even same-store sales were far higher than the Street view. The retail chain withdrew its FY 2020 outlook due to uncertainty caused by the Covid-19 pandemic and also stated that it would forego the jet.com brand. The stock closed at $130.95, down $2.71 or 2.12% from earlier close.

The Bentonville, Arkansas-based company posted first-quarter revenues of $134.62 billion, an increase of 8.6% from $123.92 billion in the year-ago period.

For the quarter ended April 30th, 2020, Walmart recorded earnings of $3.99 billion, or $1.40 per share, compared with earnings of $3.842 billion, or $1.33 a share in the quarter ended April 30th, 2019.

Excluding unrealized gains on JD.com investment, Walmart reported adjusted earnings of $1.18 per share in 1Q 2021, up from $1.13 a share in 1Q 2020. Analysts polled by Refinitiv had anticipated the company to post earnings of $1.12 per share on revenues of $132.80 billion.

Commenting on the first-quarter earnings Walmart CFO, Brett Biggs stated that “it felt like several different quarters within a quarter, particularly in the U.S.”

Segment-wise,

  • Walmart US posted revenue of $88.70 billion, an increase of 10.5% from $80.30 billion last year.
  • Walmart International recorded revenues of $29.80 billion, an increase of 3.4% from the prior-year period.
  • Sam’s club revenues increased 9.6% y-o-y to $15.20 billion.

In the US, same-store sales increased by 10% and surpassed StreetAccount consensus estimates calling for 7.2% growth. The Covid-19 outbreak has forced massive change in the shopping behavior of people, making it difficult for analysts to forecast.

Walmart revealed that e-commerce and store sales rose considerably in 1Q 2021 as consumers came to the retailer for products ranging from groceries to bicycles during the coronavirus outbreak.  The company further stated that it achieved an online sales (US) growth of 74%, considerably higher than the 37% increase last year.

Consumers made fewer trips to the store, but purchased larger volumes of goods, particularly staples such as pasta sauce and toilet paper, instead of apparel.

Along with an increase in sales, Walmart’s expenses also rose due to Covid-19. Of the roughly $900 million expenses related to coronavirus outbreak, 75% was spent on employee bonuses and other added benefits. Employees were rewarded with two rounds of special bonuses while accelerating the payout for bonuses related to first-quarter.

Being a retailer of essential goods, the company kept its shops open during the Covid-19 pandemic. A large majority of customers resorted to online shopping, with many of them buying beard trimmers, hair color, and sewing machines in expectation of staying at home for a longer time due to the Covid-19 outbreak.

To manage the rising demand, Walmart roped in 200,000 employees to assist in cleaning shelves and handle online orders.

The company’s CEO, Doug McMillon, stated that the company continues to work hard to maintain its inventory of surface cleaners and paper towels, among other things, as shoppers’ clear items from racks.

McMillon said, “For many of these items we were selling in two or three hours what we normally sell in two or three days.”

Brett Biggs revealed that consumers resorted to massive stockpiling in March, leading to a 300% increase in pickup and delivery. Biggs said, “The second quarter has started off pretty well as we continue to see the stimulus money come in for consumers.”

Despite a jump in sales, Walmart opted to withdraw its financial outlook for FY 2021 as the coronavirus has caused an “unprecedented variability” in the economy. Walmart has also decided to forego its Jet.com brand after purchasing the e-commerce firm for $3.30 billion in 2016.

The quarter earnings and Comp sales beat is expected to keep the stock range-bound with bullish bias in the days ahead.

Technically, the stock is trading above its 50-day moving average. The Chaikin money flow indicator has a positive reading. Therefore, we are anticipating the stock to move up in the short-term.

wmt - technical analysis - 20th May 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Richard W

Richard W

Richard is the guy who know everything there is about the financial industry, working in a top firm for over 15 years, he will give the lowdown on some of the biggest companies in the world


Related Articles

Salesforce Reaffirms FY2022 Revenue Outlook

  The shares of Salesforce.com, Inc. (NYSE: CRM) closed at $160.43, up 1.33% from the prior close after John DiFucci,

Call Options Favoured As General Electric Forms A Bullish Triangle

  NYSE:GE (General Electric) is the asset in focus today, as I would like to trade call options on this

Call Options for Media Giant Vivendi

  Vivendi (VIV.PA), is a clear examples of a company that is reinventing itself. They are trying get rid of