Walmart posted better-than-expected results for the first three months of this year, as Americans teeming with stimulus checks boosted sales.
Walmart raised its annual profit forecast on Tuesday after delivering better-than-expected first-quarter results, showing shoppers, grieved by the U.S. government stimulus payments, were spending on clothing as well as consumer goods. lawn and garden.
Sales at stores open at least a year were up 6 percent, slowing from the 8.6 percent increase in the fiscal fourth quarter. But that passed the 10% peak last year when Walmart became a lifeline for a coronavirus pandemic for millions of people. Online sales increased 37%, compared to 69% in the fourth quarter.
“Our optimism is higher than it was at the start of the year,” said CEO Doug McMillon. “In the United States, customers clearly want to go out and shop.”
McMillon said government stimulus funds had boosted sales and there was a lot of pent-up demand as the country emerged from the pandemic. As more and more people go out, Walmart said sales of travel items and teeth whitening products increased as shoppers removed their masks. The company also said transactions in its stores were on the rise for the first time in a year.
Shares rose nearly 4%, or $ 5.37, to $ 144.78 on the morning stock market on Wall Street.
Walmart has taken fast and convenient delivery further over the past year and sales in its stores have been high, with many other retailers forced to close during lockdowns. Even the enormous infrastructure Walmart has put in place in recent years has been strained by the crushing orders of millions of people staying at their homes.
The company increased spending by $ 14 billion to speed up its distribution network and announced in February that it would increase its average hourly wage to more than $ 15 an hour, an increase of $ 1.
Amazon and Target have already raised hourly wages to $ 15 for all workers.
Walmart’s first-quarter net income was $ 2.73 billion, or 97 cents per share, in the three-month period ended April 30. This compares to $ 3.99 billion, or $ 1.40 per share, in the previous year’s quarter. Adjusted earnings were $ 1.69 per share. Analysts were expecting $ 1.21 per share, according to FactSet.
Sales increased 2.6% to $ 137.16 billion. Analysts were expecting $ 132.16 billion.
Walmart said it now expects high-digit profit growth; previously, the company had projected a slight decline in profits for the year.
Walmart still faces many challenges. Analysts believe signups to Walmart Plus, a membership program that costs buyers $ 98 per year, or $ 12.95 per month, are slowing. The retailer is hoping it will be a big competitor to Amazon’s behemoth free shipping program, which launched 15 years ago. Walmart Plus offers members same-day delivery of 160,000 items, a fuel rebate at select gas stations, and a chance to check out Walmart stores without having to wait at a register.
McMillon told analysts on Tuesday’s earnings call that what drives the sale of subscriptions is supermarket pickup and delivery of groceries, and capacity is an issue. He said that at the moment the focus is on the quality of that experience, not the quantity.
Walmart Inc said on Friday that it would no longer require buyers or workers vaccinated against the coronavirus to wear a mask in its U.S. stores, unless state or local laws say otherwise. It offers workers a bonus of $ 75 if they are vaccinated.