Walmart reported Q1 comp sales grew 10.0 percent in the first quarter and e-commerce surged 74 percent in its U.S. operations. The quarter included incremental costs related to COVID-19 of nearly $900 million.
“More than ever, the news this quarter is our amazing associates. They are rising to the challenge to serve our customers and our communities. I’m proud of how they’re adapting and performing. Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future,” said Doug McMillon President and CEO, Walmart.
Highlights of the quarter include:
- The company’s net sales and operating results were significantly affected by the outbreak of COVID-19. Unprecedented demand for products across multiple categories led to strong top-line results. Certain incremental costs negatively affected operating income, including costs associated with enhanced wages and benefits as well as safety and sanitation.
- Total revenue was $134.6 billion, an increase of $10.7 billion, or 8.6 percent. Excluding currency, total revenue would have increased 9.7 percent to reach $135.9 billion.
- Walmart U.S. comp sales increased 10.0 percent, led by strength in food, consumables, health & wellness and some general merchandise categories.
- Walmart U.S. eCommerce sales grew 74 percent with strong results for grocery pickup and delivery services, walmart.com and marketplace.
- Due to the continued strength of the Walmart.com brand, the company will discontinue Jet.com. The acquisition of Jet.com nearly four years ago was critical to accelerating our Omni strategy.
- Sam’s Club comp sales increased 12.0 percent, led by in-club transactions. eCommerce sales grew 40 percent. Reduced tobacco sales negatively affected comp sales by approximately 410 basis points.
- Net sales at Walmart International were $29.8 billion, an increase of 3.4 percent. Changes in currency rates negatively affected net sales by approximately $1.3 billion. As a reminder, with the exception of Canada, all other international markets report on a one month lag.
- Consolidated gross profit rate declined 66 basis points primarily as a result of the carryover of investments in price from last year, a shift in the sales mix to lower-margin categories and channels as well as some markdowns in general merchandise.
- Consolidated operating expenses leveraged 62 basis points despite incremental costs related to COVID-19.
- Consolidated operating income was $5.2 billion, an increase of 5.6 percent and included lower losses in Walmart U.S. eCommerce compared to Q1 FY20. Excluding currency, operating income would have increased 6.6 percent.
- Adjusted EPS excludes only the effects of an unrealized gain of 22 cents a share, net of tax, on the company’s equity investment in JD.com.
Fiscal 2021 full-year guidance
Due to unprecedented variability in the macro-environment brought on by COVID-19, the company is withdrawing financial guidance for fiscal year 2021.
“The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including the duration and intensity of the COVID-19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence,” said Brett Biggs, Walmart Inc. chief financial officer.
“Our business fundamentals are strong, and our financial position is excellent. Customers trust us to deliver on our brand promise, and I’m confident in our ability to perform well in almost any environment. While the short-term environment will be challenging, we’re positioned well for long-term success in an increasingly Omni world.” added Biggs.
Photo courtesy Walmart