Walmart has found itself fairly essential during the coronavirus lockdown.
The retailer said Tuesday that its revenues for the first quarter of 2021 surged to $134.6 billion, an 8.6 percent increase from last year. And as customers ordered more deliveries in quarantine, its e-commerce sales increased 74 percent.
Comparable store sales rose 10 percent, in response to the demand for food and household consumer products, the company said, and its consolidated operating income for the quarter was $5.2 billion.
Its net income for the three months ending on April 30 was $3.99 billion, a 3.9 percent increase from $3.84 billion for the same time last year. Its adjusted earnings per share were $1.18 for the first quarter. On Tuesday mid-morning, Walmart shares were at $129, up by about 1 percent.
“Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future,” Doug McMillon, president and chief executive officer of Walmart, said in a statement.
The company said it is discontinuing the e-commerce start up Jet.com, which it had acquired in 2016 for $3.3 billion.
“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 at an earnings call Tuesday with analysts.
“The Jet acquisition was critical to jump-starting the progress we have made the last few years, not only have we picked up traction with pickup and delivery but our walmart.com nonfood e-commerce growth accelerated after the arrival of Marc and the [Jet team],” he added, referring to Marc Lore, president and ceo of Walmart U.S. e-commerce, and who had founded Jet.com.
On Tuesday, McMillon also broke down customer demand during the pandemic into phases, characterizing their shopping trends as beginning with stocking up. Customer spending then shifted more toward entertainment products such as video games, and do-it-yourself projects including making masks that required sewing machines, he said, noting that customers then began spending on more discretionary products as they began to receive their stimulus checks.
The Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, which passed in late March, had provided for one-time payments of around $1,200 a person, depending on their income.
“We experienced unprecedented demand in categories like paper goods, surface cleaners, and grocery staples,” he said on the call.
“For many of these items, we were selling in two or three hours what we normally sell in two or three days,” he said.
The increase in demand also highlighted the retailer’s need for more capacity, company executives said, pointing out that the company had begun fulfilling orders through some 2,500 of its stores.
But the company also said it bore almost $900 million in costs related to the COVID-19 crisis. As Walmart stores, deemed essential during the pandemic, stayed open and demand for groceries and essentials surged, the retailer had previously signaled its plans to hire more than 150,000 workers, including warehouse and distribution staff. On Tuesday, it said it had hired more than 235,000 new associates in the U.S.
Amid news reports of Walmart store employees testing positive for COVID-19, and as store associates are themselves tasked with sanitizing stores, the retailer has made gestures at compensating its staff. Since March, the company has announced bonuses for staff, as well as a $2 an hour raise for fulfillment center workers until Memorial Day, putting the starting pay for fulfillment center workers in the range of $15 to $19 for the duration.
In March, the company said it was issuing a first round of “special” bonuses to its hourly workers in the U.S., or $300 for full-time hourly associates and $150 for part-time hourly associates. It also said at the time that it would speed up its scheduled quarterly bonus for its hourly workers, doling those out in April. Combined, those bonuses totaled almost $550 million, according to the company.
Last week, Walmart revealed plans to issue another bonus to its hourly workers in the U.S., again paying $300 for full-time hourly associates and $150 for part-time hourly and temporary associates. Those bonuses would amount to a total of $390 million, according to the company. The roughly $940 million in bonuses amounts to about 23 percent of the retailer’s $4.14 billion in net income in its fourth quarter ended Jan. 31.
“More than ever, the news this quarter is our amazing associates,” McMillon said in his statement. “They are rising to the challenge to serve our customers and our communities.”
The retailer’s executives said their focus now was to replenish its stocks, in light of inventory being down by about 8 percent at the end of the quarter, due to demand.
The company is also planning its reopening of its services that were shut down during the pandemic, including its auto care and optical centers, according to John Furner who, as president and ceo of Walmart U.S., oversees more than 4,700 stores and 1 million associates, according to Walmart’s web site.
“We’re doing those reopenings in a few of those in limited spots this week to learn how to best give that service back to our customers,” Furner said on the conference call.
The company’s performance was received well by analysts Tuesday, who lauded its investments in e-commerce.
“Walmart’s Q1 results illuminate the impact of the coronavirus on the U.S. consumer, providing insight into the shift in product mix away from discretionary items toward food and consumables, as well as the surge in online, with up 74 percent on a base of over $20 billion reflective of increasing comfort of consumers, borne out of necessity, with this channel,” said Moody’s lead Walmart analyst Charlie O’Shea, in a statement.