Walmart posted better-than-expected results during the first three months of this year, as Americans fired off stimulus checks and increased sales.
Walmart raised its annual earnings forecast on Tuesday after delivering better-than-expected results in the first quarter, which showed buyers were up to par with U.S. government stimulus payments. which wasted both clothing and lawn and garden items.
In-store sales for at least a year rose 6 percent, slowing to 8.6 percent in the fourth fiscal quarter. But that surpassed last year’s 10% rise when Walmart became a coronavirus pandemic lifeline for millions of people. Online sales rose 37 percent, from 69 percent during the fourth quarter.
“Our optimism is higher than at the beginning of the year,” said Doug McMillon, CEO. “In the United States, it’s clear that customers want to go shopping.”
McMillon said money from government incentives increased sales and there is a lot of accumulated demand as the nation emerges from the pandemic. As people go out more, Walmart said sales of travel items and teeth whitener appear as shoppers take off their masks. The company also said transactions in its stores were increasing for the first time in a year.
Shares rose about 4 percent, or $ 5.37, to $ 144.78 in the morning trading on Wall Street.
Walmart has further boosted fast and convenient delivery over the past year and sales in its stores have increased, with so many other retailers forced to close during closures. Even the massive infrastructure put in place by Walmart in recent years has been strained by the collapse of the orders of millions of people being taken home.
The company increased spending by $ 14 billion to accelerate its distribution network, and in February said it would increase its average hourly wage to more than $ 15 per hour, an increase of $ 1.
Amazon and Target have already increased hourly wages to $ 15 for all workers.
Walmart’s first-quarter net income was $ 2.73 million, or 97 cents a share, in the three-month period ended April 30th. That compares to $ 3.99 million 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 rose 2.6 percent to $ 137.16 billion. Analysts had expected $ 132.16 billion.
Walmart said it now expects profits to increase in the highest single digits; previously, the company had projected a slight drop in profit for the year.
Walmart still faces many challenges. Analysts believe enrollment in Walmart Plus, a membership program that costs buyers $ 98 a year, or $ 12.95 a month, is slowing. The retailer expects it to be a big competitor to Amazon’s juggernaut Prime free shipping program, launched 15 years ago. Walmart Plus offers members a same-day delivery of 160,000 items, a discount on fuel at certain gas stations and the ability to visit Walmart stores without having to wait for a check-in.
McMillon told analysts during Tuesday’s earnings call that what is driving member sales is picking up and delivering groceries and capacity is an issue. He said right now the focus is on the quality of this experience, not the quantity.
On Friday, Walmart Inc. said it will no longer require buyers or workers vaccinated against coronavirus to wear a mask in its U.S. stores unless state or local laws say otherwise. It offers workers a $ 75 bonus if they get vaccinated.