Retail giant Walmart Inc. WMT reported a surge in earnings on the back of COVID-19 in its Tuesday fiscal second-quarter 2021 (ended July 31) report. The Bentonville, Arkansas-based company reported adjusted earnings per share (EPS) of $1.56, outpacing analysts' forecasts of $1.25.
Comparable sales grew 9.3% year-over-year in the U.S., with e-commerce sales climbing 97%. The company cited high demand for general merchandise and food as the drivers.
"Q2 sales started strong, both in store and online, particularly in general merchandise, helped by government stimulus spending. Grocery sales had another strong quarter," the earnings presentation stated. "As stimulus funds tapered off, sales started to normalize, but July comps still grew more than 4%."
Walmart's Key Performance Indicators
Transactions were off 14% year-over-year at Walmart stores in the U.S. but the average ticket increased 27%. "Customers continued to consolidate store shopping trips with larger average baskets and shifted more purchases to e-commerce," according to the presentation.
Grocery sales increased in the mid-single-digit percentage range with low-single-digit growth seen in health and wellness items. General merchandise — household goods, electronics, outdoor living, lawn and garden, and sporting goods — saw mid-teens growth. "Spending of government stimulus funds benefited results," stated the presentation.
Walmart's inventories are down 6.9% year-over-year, level with the fiscal first quarter, as pandemic-related, stay-at-home lifestyles have led to higher ticket sizes in the store and online. On a U.S. comparable store basis, inventory is down 10%.
The increased sales and lower inventories bode well for trucking as many of the nation's largest carriers move freight for the retailer.
Home improvement chain Home Depot HD reported a 23.4% year-over-year increase in comparable sales and an 8.4% reduction in inventory in its second-quarter earnings report Tuesday.
Membership income increased 7.8% year-over-year at Sam's Club, the highest in more than five years. Comparable sales climbed 8.7% as the unit saw a more than 60% increase in its new member count.
On a consolidated basis, revenue increased 7.5% year-over-year excluding currency fluctuations to $140 billion, with adjusted operating income increasing 18.6% to $6.6 billion. The quarter benefited from a mix shift to general merchandise carrying higher margins, fewer markdowns and higher fuel margins.
Shares of WMT are flat in premarket trading. The slower pace of growth in July and the comment that "sales started to normalize" appear to have taken some of the steam out of the stock, which was up more than 6% in early premarket trading.
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