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Walmart Gets Big Boost From Pandemic Panic


Walmart sales surged in the first quarter amid unprecedented demand for grocery staples and cleaning supplies from consumers panicked by the coronavirus pandemic.

Visits to Walmart stores declined as customers stayed home. When they did venture out to shop, they spent more, with spending per transaction rising 16.5{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} in the quarter ended April 30.

As a result, same-store sales increased 10{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} while overall sales grew by 8.6{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} to $134.62 billion, beating analysts’ estimates of $132.80 billion.

“We experienced unprecedented demand in categories like paper goods, surface cleaners, and grocery staples,” Walmart CEO Doug McMillon said on an earnings call. “For many of these items, we were selling in two or three hours what we normally sell in two or three days.”

The company’s e-commerce sales increased 74{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} as customers shifted to ordering online for home delivery or curbside pickup.

“It is a big advantage being an omnichannel retailer and I think that is showing right now. We had backups in our fulfillment centers too” but were able to quickly use stores to fill online orders, CFO Brett Biggs told The Wall Street Journal. “That is something that our competitors, they can’t all do it.”

As CNN reports, the pandemic “has crushed much of the retail sector and tipped several chains, including JCPenney, J.Crew, and Neiman Marcus, into bankruptcy.” But chains such as Walmart and Home Depot have reaped the benefits of being deemed “essential businesses.”

Walmart said it absorbed about $900 million in additional costs related to COVID-19, including raising wages for warehouse workers and paying bonuses to its store staff. It also hired 235,000 new hourly workers to help staff stores.

Consolidated gross profit rate declined 66 basis points, reflecting in part a shift in the sales mix to lower-margin categories and the lower-margin e-commerce channel.

The long-term question for Walmart is “what happens to the margins,” said Morgan Stanley retail analyst Simeon Gutman, noting that the rapid growth in online sales in recent months “has stressed supply chains and it’s definitely a lower margin way of doing business.”

Blake Nissen for The Boston Globe via Getty Images

Brett Biggs, coronavirus, Doug McMillon, e-commerce, omnichannel, retail, walmart


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