Walmart Inc. posted stronger-than-expected quarterly sales fueled by soaring online orders and its market-leading grocery business, but added costs from the pandemic plus a $380 million charge related to layoffs weighed on profitability. Shares rose in early trading.
- Comparable-store sales, a key retail metric, increased 9.3% for U.S. Walmart stores in the period, compared with the 6.4% estimate compiled by Consensus Metrix. Revenue of $137.7 billion in the quarter also beat expectations. The retailer, which withdrew guidance in May, didn’t offer a fresh outlook on Tuesday due to uncertainty about the virus and the timing and scale of additional government stimulus spending.
- The results include a $380 million charge for business restructuring, including layoffs. Walmart has been reorganizing its roughly 4,750 U.S. stores by reducing its corporate and field staff and consolidating divisions, Bloomberg Newsreported in July.
- Walmart said gross profit margins in the quarter widened by 63 basis points as it sold more non-food items that deliver better profits, with demand for those items fueled by government stimulus checks. But its operating expenses as a percentage of sales — a key metric watched by investors — increased due to $1.5 billion in Covid-related costs and the charge for the job eliminations.
- The retailer’s U.S. e-commerce sales rose 97% in the quarter, compared with the average analyst estimate of nearly 60%. That comes as the coronavirus has catalyzed online purchases, and Walmart has been a primary beneficiary thanks to its revamped website and a newpartnership with Shopify Inc. to bring more merchants into its fold. Walmart isplanning to introduce a subscription program, dubbed Walmart+, that could challenge Amazon Prime and help it hold onto the millions of new shoppers it has picked up during the pandemic.
- Walmart has been returning to more normal operating procedures even as the pandemic spreads, and said that more than 4,000 of its U.S. stores will expand their closing time to 10 p.m. from 8:30 p.m. this week. Analysts will be looking for more guidance on a call with executives this morning.
- The shares rose 6% in premarket trading.
- For more on the results, clickhere.
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