Why Walmart Dominance In Q2 Will Continue For Rest Of Year - Forbes

Home Depot, Target and Walmart Face High Expectations on Earnings During The Coronavirus Pandemic — mpi04/MediaPunch/MediaPunch/IPx

Walmart U.S. comparable sales grew by 9.3% and Walmart U.S. e-commerce grew 97%. Those two headline news items blew me away. Management explained that much of the special purchases were for home as people build up their home office and adjusted to the coronavirus COVID-19 pandemic by working from home.

Total revenues increased to $137.7 Billion from $130.4 Billion. This is a 5.6% increase. Consolidated income was $6.4 Billion compared to $3.6 Billion a 79.4% increase. This was way above anybody’s estimates.

Walmart U.S. net sales increased 9.3% to $93.3 Billion from $85.2 Billion in the second quarter. The average ticket increased 27% and operating income rose to $5.1 Billion from $4.7 Billion in the second quarter. The strength was both in general merchandise and food.

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The results of the heavy frequency of buying resulted in fewer markdowns. Despite the heavy traffic inventory was down about 8% from last year’s level. Management indicated that at the beginning of the quarter stores were often out of stock of certain wanted items while at the end of the quarter the situation had improved. Much work has been done on store pick-up and an automated test is now going on in stores in New Hampshire and Texas.

Sam’s Club comparable store sales increased 13.3% from $15.0 Billion to $16.4 Billion. Reduced tobacco sales negatively affected comparable store sales by about 300 basis points. Growth of new membership increased by about 60%, which management indicated was the highest in five years.

International sales were $27.2 Billion a decrease of 6.8% from last year’s $29.1 Billion. Excluding currency rates fluctuation net sales would have been $29.6 Billion, an increase of 1.6%. Net sales included the government mandated closure of the Flipkart business in India for a portion of the quarter and similar actions were taken in Africa and Central America.

Management discussed their Instant Care clinics. There are now installations in Georgia, Arkansas, Florida, and shortly in Chicago where customers can have instant medical attention at affordable rates. It is anticipated that these Instant Care clinics will be expanded further.

Management also discussed the company’s third bonus for front line workers granted toward the end of the second quarter. This together with higher cleaning costs added to the selling cost expense which rose 4.9%.

Management did not give any earnings estimate for future quarters due to the uncertainty of the environment. The uncertainty of school openings and the possibility of future coronavirus COVID-19 outbreaks cloud the outlook.

I anticipate that the strong sales on e-commerce will continue. There is no change in the fear customers have to shop in stores and Walmart’s quick delivery assures customers that their needs can be met. The company now has the trust of customers being able to shop for every day low prices.

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