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Aug 17, 2021
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Walmart raises forecast as people buy more clothes, e-sales growth moderates

By
Reuters
Published
Aug 17, 2021

Walmart Inc increased its annual U.S. same-store sales forecast after beating analysts' estimates on Tuesday, as shoppers coming out of lockdown bought more clothes, travel gear and back-to-school merchandise. As store sales rose, however, the pace of Walmart's online growth slowed dramatically to 6% from 37% in the first quarter.


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Still, Walmart is on track to reach $75 billion in global e-commerce sales by the end of the year -- the retailer reported its biggest ever online sales growth of 97% last year as people used its quick delivery services to order essentials at the height of the pandemic.

"Even as e-commerce growth slowed as we layered on top of tremendous growth last year ... The good news for us is that we can serve them (shoppers) either way," Chief Executive Doug McMillon said.

The results kick off a big week of earnings from major U.S retailers - including Target and Macy's -- which are all expected to have benefited from people tentatively leaving their homes this summer. Investors are concerned, however, that their newfound freedom could be cut short with a resurgence in COVID-19 cases due to the more contagious Delta variant of the virus.

Sales at Walmart's U.S. stores open at least a year rose 5.2%, excluding fuel, in the second quarter ended July 31. Analysts had estimated a growth of 3.69%, according to IBES data from Refinitiv.

The world's biggest retailer has also been given a boost by stimulus checks handed out during the pandemic, and most recently from the Biden Administration's advance child tax credits.

Walmart said it now expects fiscal 2022 U.S. same-store sales to be up 5% to 6%, compared with the low single-digit growth it had previously forecast. It also expects current quarter sales to be well above estimates. The outlook accounts for continued strength in the U.S. economy and no significant additional government stimulus for the rest of the year.

Increasing third-quarter guidance shows that Walmart will continue to run on all cylinders, leaning heavily on its stores, Moody's retail analyst Charlie O'Shea said.

Walmart's U.S. gross margin improved 20 basis points, as fewer discounts and a doubling of U.S. ad sales helped offset higher supply chain costs.
Walmart reported adjusted earnings per share of $1.78, handily beating analysts' expectations of $1.57 per share. Total revenue rose 2.4% to $141.05 billion, ahead of expectations of $137.17 billion.

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