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May 20, 2020

More on Walmart's Q1: Online Soars 74%

SN: "Citing “unprecedented demand” due to the COVID-10 outbreak, Walmart posted double-digit gains in U.S. net and comparable sales for its fiscal 2021 Q1 ended April 20, with e-commerce sales leaping 74% from a surge in use of online pickup and delivery services... Walmart’s overall revenue rose 8.6% to $134.6B from $123.9B a year earlier. In constant currency, revenue was up 9.7% to $135.9B. Operating income was $5.2B, up 5.6% from $4.6B (+6.6% to $5.3B in constant currency). Net income attributable to Walmart totaled $3.99B, or $1.40 per diluted share, compared with $3.84B, or $1.33 per share, a year ago. On an adjusted basis, diluted net EPS were $1.18, excluding a net impact of 22 cents from the unrealized gains/losses on the company’s investments. Walmart U.S. saw net sales climb 10.5% to $88.74 billion from $80.34 billion. Same-store sales jumped 10% year over year, excluding gasoline (+9.9% with fuel). While the number of transactions fell 5.6%, the average ticket size swelled 16.5% as consumers stocked up to shelter in place during the coronavirus pandemic. Operating income gained 3.9% to $4.3 billion.“Despite strong ticket growth in sales in the first quarter, mix shifts negatively affected gross margin, and we incurred higher costs to operate,” McMillon said. “Our increasingly seamless omnichannel customer proposition is resonating. The strategy positioned the company well during this crisis, and we remain convinced that it will in the future.” In the U.S., Q1 started out as expected, but "as the pandemic spread, we saw the mix of sales shift heavily toward food and consumables, as we had previously experienced in China," he reported. "This was the first stock-up phase that we all saw so vividly. 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 relating to DIY and home-related activities. “For the end of the quarter, another phase emerged,” he continued. “Call it relief spending, as it was heavily influenced by stimulus dollars leading to sales increases in categories such as apparel, televisions, video games, sporting goods and toys. Discretionary categories really popped towards the end of the quarter.” Turning to online, he said: “I think it’s time we stop referring to our Supercenter pickup and delivery capability as online grocery, because it’s becoming much more than grocery,” McMillon added. “ also saw a surge in demand during the quarter as customers opted for greater convenience and increased social distancing,” he said. “Growth in marketplace outpaced the overall business, even as first-party sales were strong.” Walmart's Sam's Club division saw similar trends in Q1. Net sales were up 9.6% to $15.16BZ from $13.83B a year earlier. Comp sales grew 12% excluding gas (+8.5% with fuel), and transaction count surged 11.9% despite just a 0.1% uptick in the average ticket. Sam’s e-commerce sales gained 40% at the top line and 1.7% on a comp basis. Operating income rose 9.5% to $494M"

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