Walmart profits up as online sales soar 97% during Covid lockdown
US retail giant Walmart almost doubled online sales during the second quarter as Americans splurged their stimulus support payments on high-margin items during the coronavirus lockdown.
The company on Tuesday said e-commerce sales in the US soared by 97% as customers bought electronics and items for the home and garden with growth in the mid-teens for Walmart’s general merchandising unit. Shares in the company rose 6% in pre-market trading on the news.
Operating income rose 8.5% to $6.1bn in the three months to July 31, while adjusted earnings per share rose 22.8% to $1.56, well above estimates of $1.25. Total revenue rose 5.6% to $137.74bn.
Net income rose to $6.48bn, or $2.27 per share, from $3.61bn, or $1.26 per share, a year earlier. Walmart offered no future guidance.
Gross margins rose to 24.9% in the quarter, exceeding expectations of 24.24%.
US same-store sales grew by 9.3% in the second quarter, driven by purchases of food and general merchandise. International sales fell 6.8% to $27.2bn due to adverse currency effects and the temporary shutdown of the Flipkart business in India for part of the quarter, as well as operations in Central America and Africa.
“With government stimulus spending, we saw increased sales of higher margin general merchandise categories and fewer markdowns,” Walmart said in a statement.
CMC Markets analyst Michael Hewson said that while the numbers were impressive "it should also be remembered that Walmart was one of the few companies that was allowed to stay open, when many smaller retailers had to close".
"The increase in sales volumes did come with a downside coming as it did with a significant increase in costs, as the company spent $1.5bn extra on safeguarding measures and extra staff. As we head into Q3 consumer spending should start to level off from the elevated levels seen in Q1 and Q2 as lockdown measures taper off, and other stores reopen and the stimulus money tapers off."