Walmart Increases Forecast With Customers Returning To Its Stores While Online Sale Slows

Consumers in the United States stepped out of their home more with the lifting of Covid-19 pandemic related restrictions and into stores and were reported to make purchases of more clothes, travel gear and back-to-school merchandise, which drove Walmart Inc to increase it annual U.S. same-store sales forecast. The company also beat analysts’ estimates for financial performance of the latest completed second quarter.

However the company also experienced a dramatic slowdown in its online sale to only 6 per cent of total sales compared to a 37 per cent in the first quarter.

Despite this the company expects its global ecommerce sales by the end of the year to reach $75 billion even as the largest retailer of the world reported its largest ever sales growth for its online channel of 97 per cent last year, when people used the quick delivery services of the company to order staples and daily essentials during the height of the pandemic.

“Even as ecommerce 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,” the company’s Chief Executive Doug McMillon said.

Walmart’s earnings report was followed by a week of earnings reporting by major US retailers – including Target and Macy’s – and all of the retailers are expected to benefit from more people leaving their homes this summer. However, there were concerns among investors about the lifting of pandemic restrictions potentially being cut short because of a resurgence of fresh Covid-19 infections in the US primarily caused by the more contagious Delta variant of the coronavirus.

A growth of 5.2 per cent was reported for sales at Walmart’s US stores that were open for at least a year for the second quarter ended July 31. The number however excluded sale of fuel. According to IBES data from Refinitiv, analysts had estimated a growth of 3.69 per cent.

Stimulus checks handed out during the pandemic, as well as the advance child tax credits by the Biden administration also helped sale boost for the biggest retailer pf the world during the latest completed quarter.

Walmart now forecasts fiscal 2022 US same-store sales to grow by between 5 per cent and 6 per cent, compared with its previous forecast of low single digit, the company said and added that it now also expects sales for the current quarter to be well above analysts’ estimates.

The forecast made by the company assumed a continuation of the strength in the US economy and no further government stimulus being delivered for the remaining of the year.

Moody’s retail analyst Charlie O’Shea said the enhanced guidance for the third quarter prompt one to expect Walmart’s operations and profits to be primarily dependent on its stores. 

(Adapted from Business-Standard.com)

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