Walmart earnings soar as e-commerce sales jump, shoppers flock to stores

Key Points
  • Walmart's e-commerce sales grew by 74% and its same-store sales jumped by 10% in the first quarter.
  • The big-box retailer withdrew its financial outlook for the year, saying the coronavirus pandemic has created "unprecedented variability."
  • The company hired more than 200,000 employees to help clean stores, stock shelves and fulfill online orders during the pandemic.
People wearing masks and gloves wait to enter a Walmart on April 17, 2020 in Uniondale, New York.
Al Bello | Getty Images

Walmart said Tuesday that e-commerce and store sales grew significantly in the first quarter as customers turned to the retailer for items from groceries to bicycles during the coronavirus pandemic.

The company's shares were down about 1% Tuesday afternoon.

The big-box retailer said customers' long stays at home and their precautions during the public health crisis shook up shopping patterns. Shoppers made fewer trips to the store, filled up bigger baskets and sought out staples, such as toilet paper and pasta sauce, instead of discretionary items like apparel.

Walmart's e-commerce sales in the U.S. shot up by 74%, and same-store sales grew by 10% in the first quarter. The company's average ticket increased by 16% and transactions dropped by about 6% during the quarter, chief financial officer Brett Biggs said. 

Walmart CEO Doug McMillon said the company has worked hard to keep up inventory as customers have cleared some items from shelves, such as paper towels and surface cleaners, and skipped over others. 

"For many of these items we were selling in two or three hours what we normally sell in two or three days," he said.

Here's what Walmart reported for the first quarter ended April 30:

  • Earnings per share: $1.18, adjusted
  • Revenue: $134.62 billion

As Walmart's sales grew during the pandemic, so did its costs. To keep up with demand, Walmart hired more than 200,000 employees to help clean stores, stock shelves and fulfill online orders.

Biggs said it spent nearly $900 million on expenses related to Covid-19. About three-fourths of that went to employee bonuses and expanded benefits, he said. The company has had two rounds of special bonuses for employees and accelerated the payout of first-quarter bonuses.

In a call with analysts Tuesday, McMillon described three distinct parts of the quarter. Initially, he said customers stockpiled groceries and household essentials. Later, he said they bought puzzles, video games and bicycles to keep them entertained, office and exercise equipment to help them with their new routine at home and decor to improve their living spaces. At the end of the quarter, the retailer saw a bounce in spending as people gotstimulus checks and bought more discretionary items, such as clothing, TVs and toys.

"Not only have products and categories like hand sanitizer, disinfecting wipes and sprays, toilet paper, beef, and pork been hard to find but items such as laptops, office chairs, and fabric have been cleared out in some of our stores and online," he said. "We're working to recover our in-stock position as we begin the second quarter."

Despite beating Wall Street's expectations, Walmart joined many other companies in withdrawing its financial outlook. Biggs said the virus has created "unprecedented variability" in the economy. He said many factors could influence the company's sales, including the duration of the Covid-19 crisis, the amount of economic stimulus and consumer confidence.

The retailer also announced that it is phasing out the brand. Walmart bought the e-commerce company for $3.3 billion in 2016 to speed along its e-commerce strategy and better position the brick-and-mortar giant to compete with Amazon.

With the acquisition, Walmart gained a team of online talent — led by Marc Lore, founder of and now chief executive officer of Walmart U.S. eCommerce. 

McMillon said the company hasn't ruled out using the brand name in the future, but said he's seen the Walmart name "resonate regardless of income, geography or age."

He described the acquisition as "critical to jump-starting the progress we have made the last few years" and pointed to the retailer's expansion in curbside pickup, delivery of online purchases to the home and growth in categories beyond grocery.

In the first quarter, Walmart reported net income rose to $3.99 billion, or $1.40 per share, from $3.84 billion, or $1.33 a share, a year earlier. Excluding items, Walmart earned $1.18 per share. Analysts were expecting Walmart would earn $1.12 per share, according to Refinitiv. 

Total revenues grew by 8.6% to $134.62 billion from $123.9 billion a year earlier, exceeding Wall Street's expectations of $132.80 billion.

Sales at Walmart's membership-based warehouse club, Sam's Club, increased during the pandemic, too. Same-store sales grew 12%, excluding fuel, compared with less than 1% a year prior. Its e-commerce sales were up 40%.

Correction: An earlier headline overstated the e-commerce sales increase.  

Walmart has hired more than 100,000 temporary workers
Walmart has hired more than 100,000 temporary workers