Walmart Soars In Q1 But Grounds Jet.com

Walmart posted strong, coronavirus-influenced results for the first quarter while announcing that it is closing shop on Jet.com.

For the first quarter ended April 30, Walmart reported that company net income was $3.99 billion, or $1.40 per diluted share, versus $3.84 billion, or $1.33 per diluted share, in the year-before period.

Adjusted to exclude one time events, earnings per share were $1.18 versus $1.13 in the fiscal year previous. Walmart topped an adjusted earnings per share analyst consensus estimate of $1.12 published by MarketBeat.

Walmart U.S. comparable sales, without consideration of fuel revenue, advanced 10%, with transactions down 5.6% and average ticket up 16.5%. E-commerce comparable sales gained 390 basis points. Sam’s Club comparable sales, without fuel revenue, advanced 12%, with transactions up 11.9% and average ticket up 0.1%. E-commerce comparable sales gained 170 basis points.

Total  revenues for the company were $134.62 billion versus $123.93 billion while net sales were $133.67 billion versus $122.95 billion in the year-prior quarter. Operating income was $5.22 billion versus $4.95 billion in the quarter a year earlier.

Walmart CEO Doug McMillon praised associates who have executed the adaptations the company has made to address circumstances the COVID-19 outbreak has forced on the company. He said that the company’s omnichannel strategy has helped it effectively serve customer needs in the coronavirus crisis and would do so into the future.

In a conference call, McMillon said the company had established five priorities to cope with the COVID-19 pandemic as it spread across the U.S.: support employees on the front lines including with measures to maintain their physical and financial health; serve customers who need access to food and essential supplies; help others including the communities, new associates, suppliers and operators of leased spaces as well as government agencies; manage short-term finances and operational circumstances, especially as regards cash position and inventory levels; and drive company strategy forward even as it negotiates the current crisis environment.

The first quarter began as planned, McMillon said, but as the pandemic spread in the U.S., Walmart had to accommodate the shift toward food and essential needs purchasing, as it had to do in China earlier as stores there were hit by the initial coronavirus outbreak.

“We experienced unprecedented demand in categories like paper goods, surface cleaners and grocery staples. For many of these items, we were selling in two or three hours what we normally sell in two or three days. As the quarter progressed, we saw a second phase related to entertaining and educating at home. Puzzles and video games took off, parents became teachers, adult bicycles started selling out as parents started to join the kids. An overlapping trend then started emerging related to DIY and home related activities: Think games, home office, exercise equipment and the like. It was also clear a lot of people were taking a do-it-yourself approach as they bought items like bandanas and sewing machines to make masks. We could see customers seeking to improve their indoor and outdoor living spaces. Our home categories in-store and online took off.”

As consumers received stimulus payments, discretionary spending increased, McMillon said, spreading to everything from toys to televisions to apparel to sporting goods. Volume stretched the distribution function and some products, including office chairs, sold out, so that Walmart has been pushing restocking efforts.

McMillon added that customers embraced storeside pickup and delivery. He said that pickup and delivery had attracted four times more new customers recently versus late winter. And he insisted that online-based operations, as executed through pickup and delivery, had expanded in range of product throughput, that it no longer is appropriate to call it online grocery.

McMillon said that Walmart continues to drive strategy in a disciplined manner, an approach that weighed on the decision to discontinue the Jet.com business.

“While the brand name may still be used in the future, our resources, people and financials have been dominated by the Walmart brand because it has so much traction,” McMillon said. “We’re seeing the Walmart brand resonate regardless of income, geography or age. The Jet acquisition was critical to jump-starting the progress we’ve made in the last few years. Not only have we picked up traction with pickup and delivery, but our Walmart.com non-food e-commerce growth accelerated after the arrival of Marc [Lore] and the Jet team.”