NEW YORK — Walmart Sales lifted its annual earnings outlook on Tuesday after reporting better-than-expected first-quarter results that showed consumers splurged on clothes and lawn and garden goods thanks to U.S. stimulus payments.
Sales at retailers that have been open at least a year increased by 6%, down from a rise of 8.6% in the fiscal fourth quarter. However, it outperformed last year’s 10% increase, as Walmart became a pandemic lifeline for millions of people. Online transactions increased by 37%, down from 69% in the previous year.
CEO Doug McMillon stated, “Our optimism is higher than it was at the beginning of the year.” “Customers in the United States clearly want to go out and shop.”
Government stimulus money fuelled revenue, according to McMillon, and there is a lot of pent-up demand as the country recovers from the pandemic. When customers go out more, Walmart reports an increase in purchases of travel goods and teeth whiteners as shoppers remove their masks. Transactions in the company’s shops were also up for the first time in a year, according to the company.
With so many other outlets having to shutter through lockdowns, Walmart has moved deeper towards quick and easy distribution over the last year, and profits at its stores have increased. Even Walmart’s vast infrastructure, which is built in recent years, was strained by the flood of orders from millions of customers who were forced to stay at home.
It increased its delivery network budget by $14 billion and announced in February that it would lift its average hourly pay to more than $15 per hour, a $1 rise. Amazon and Target have also raised hourly pay for all employees to $15.
In the three months ending April 30, the company earned $2.73 billion in net profits or 97 cents per share. In the prior year, revenue was $3.99 billion, or $1.40 per share. Adjusted earnings per share are $1.69. According to FactSet, analysts were predicting $1.21 per share.
Walmart currently expects profits to rise in the high single digits, up from its earlier forecast of a modest profit reduction for the year.
Walmart also has a lot of issues to deal with. Analysts assume that the number of people signing up for Walmart Plus, a loyalty package that costs $98 per year or $12.95 a month, is declining. The retailer hopes to be a major challenger to Amazon’s colossal Prime free shipping service, which was introduced 15 years earlier. Walmart Plus customers get same-day shipping on 160,000 goods, a diesel discount at select gas stations, and the ability to check out without having to queue at a counter at Walmart stores.
During Tuesday’s earnings call, McMillon told investors that grocery supercenter pickup and distribution is boosting membership sales, and that capacity is a problem. Right now, he said, the focus is on the nature of the experience rather than the quantity.
Walmart Inc. said on Friday that vaccinated customers and employees would no longer be required to wear masks in its U.S. stores unless state or municipal regulations mandate otherwise. Whether employees are vaccinated, they will get a $75 incentive.