Stimulus Helps Walmart Beat Q1 Expectations

Federal stimulus payments and pent-up demand to “get and out shop” helped Walmart post U.S. comps that were higher than the company or analysts expected in its fiscal first quarter.

For the 13-week quarter ending May 1, the Bentonville, Ark.-based retailer said U.S. sales of $93.2 billion increased by 5%, with 6% U.S. comps behind a 9.5% average basket increase and a 3.2% decline in comparable transactions. U.S. e-commerce sales increased by 37% in the quarter led by growth in store pickup and delivery, and sales on its e-commerce Marketplace. E-commerce made a 360-basis point contribution to its comp sales in the quarter.

In last year’s first quarter, which included a surge in consumable sales related to the onset of the pandemic and a concurrent dip in general merchandise as lockdowns took effect, Walmart posted 10% U.S. comps. This year’s comp figure reflected a low single-digit decline in grocery comps despite “robust” volumes in pickup and delivery, while health and wellness comps increased by mid-single digits and general merchandise comps increased by more than 20%, as much of those sales evaporated in the first weeks of the lockdown last year.

Sam’s Club sales totaled $16.7 billion in the quarter, with comp sales up by 7.2%. International sales totaled $27.3 billion, a decline of 8.3% or 11.4% at constant currency rates, reflecting divestitures.

Total revenues in the quarter were up 2.7% to $138.3 billion, or 2.1% at constant currency rates. Sales at constant currency rates totaled $136.2 billion, a 1.9% increase; and gross margin as a percent of sales was 24.7%, a 107 basis-point increase.

Adjusted earnings per share of $1.69 beat Wall Street estimates by 48 cents. Revenue and comps were also above analyst expectations—and Walmart’s as well.

“This was a strong quarter. Every segment performed well, and we’re encouraged by traffic and grocery market share trends,” CEO Doug McMillon said in a statement. “Our optimism is higher than it was at the beginning of the year. In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and e-commerce continues to grow.”

McMillon added he expected Walmart would see continued demand lifting sales this year. The company slightly adjusted its fiscal-year outlook, saying now that it expected U.S. comps to increase in the low single digits. It had not provided guidance for this metric previously. It expects U.S. operating income to increase in the high single digits vs. a previous call for a “slight” increase in that metric.