NEW YORK: Walmart Inc beat Wall Street expectations with its quarterly revenue and earnings on Tuesday and reported record U.S. online sales as stockpiling drove consumers to its stores and website during the coronavirus pandemic, sending its shares up 3%.
The world’s largest brick-and-mortar retailer, like many other essential businesses, has seen a surge in demand late in March and early in April as “shelter-in-place” orders made consumers stock up on staples while limiting their trips to the grocers.
However, the company pulled its forecast for the full-year due to the uncertainty to its business caused by the pandemic.
Walmart’s online business, which rose 74% in the first-quarter, benefited from the retailer’s investments in store pick-up and delivery services. It said the strength of its own online operation made it decide to discontinue Jet.com, the online start-up it acquired in 2016 for $3.3 billion.
The business was undergoing an overhaul last year by integrating its retail, technology, marketing, analytics and product teams with Walmart’s own online business.
The company added that grocery pickup and delivery for food and other consumables reached record sales volumes and also saw high demand for electronics, toys and sporting goods in the quarter.
Overall, sales at U.S. stores open at least a year rose 10%, excluding fuel, in the first quarter ended April 30. Analysts had expected a gain of 8.8%, according to IBES data from Refinitiv.
Walmart has also been ramping up hiring, temporarily increasing wages and spending more on the maintenance of its stores and fulfillment centers as frustrations mount among U.S. warehouse, delivery and retail workers over concerns about their safety and pay.
Operating margins fell 62 basis points to 20.5% in the quarter as Walmart said it incurred additional costs related to pandemic of nearly $900 million.
Still, operating income rose 5.6% to $5.22 billion in the quarter ended April 30 with adjusted earnings per share at $1.18, beating Wall Street expectations of $1.12.
“The reduction in margins, especially when considering coronavirus-oriented spend and the explosion in higher-cost online sales, is actually fairly benign, indicating that Walmart’s online business was able to largely handle this growth surge within its existing capability,” Moody’s analyst Charlie O’Shea said.
Total revenue rose 8.6% to $134.6 billion, beating analysts’ estimates for $132.79 billion.