You heard that right. In the recent Walmart earnings release, the company released it’s highest earnings in decades. Following the beginning of the pandemic, earning estimates were not very high. The overall decline in commerce leads to the belief that this would reflect in the fortune 500 company. Turns out, that wasn’t true.
The company had announced the upcoming earnings release on 18 August 2020. Doug McMillan, CEO of Walmart Inc. hosted the conference call informing investors of the good news. Walmart’s e-commerce sales increased by a whopping 97% in the United States. The unexpected surge is attributed to an increase in customers who shipped packages to their homes. It was also noted that more customers made use of the curbside pickup and same-day delivery options.
Same-store sales also witnessed a rise of 9.3% in the country. This rise is attributed to the sudden increase in the purchase of food items and general merchandise. Walmart officials admitted that they’ve been struggling to stock up the stores fast enough. Doug McMillan also announced that a new membership scheme will be launched to build on these gains.
What’s In It For Investors?
Total shares involved in Walmart have a market value of $384 billion. This has risen by almost 15% since the beginning of the pandemic. During the latest earnings release, the company gave out detailed information to the investors. This included earnings per share, revenue and sales in addition to a report detailing the steps taken by the company to further the enterprise.
Walmart reported a net income rise of $2.27 per share from $1.26 per share last year. The adjusted figure would be $1.56 as opposed to $1.25 which was predicted by Refinitiv’s consensus estimates. The company received a revenue of $137.74 billion which is a 5.6% rise from last year’s revenue of $130.38 billion.
Walmart revealed that it had spent about $1.5 billion to recruit a workforce of 400,000 members per hour. This was required to meet the additional demands for home delivery services and store management as an impact of Covid-19. The company also reported a fall of 6.8% in international net sales. This was said to be due to the mandatory closure of stores in countries like India.
Walmart Business Model And It’s Relevance
Why was it that Walmart witnessed a surge in sales in the United States while other retailers struggled to keep up?
The fortune 500 company owes a large part of it’s success to its strong online presence. This is a factor that is indispensable for the future of any business. Millennials are increasingly turning to the online mode of shopping and commerce. If you haven’t already thought of creating a strong online presence for your business, this is an opportunity to start.
Innovation is key. McMillon mentions a number of new projects to make use of recent demands. Membership schemes, speeding up of deliveries, and collection of feedback in addition to close monitoring was mentioned during the conference. Understanding the demand and providing a timely response can work wonders.
McMillon has not dropped any hints regarding the date of launch or new features to be included in the new projects. But it was mentioned that a new initiative named Walmart+ will be launched. Similar to Netflix and Amazon Prime, we’ll have to wait to see how successful it becomes.