Walmart raises outlook as sales grow despite Delta variant surge


Walmart raised its full-year outlook for the second time in three months, after a strong start to the back-to-school shopping season gave sales a boost even as the spread of the Covid-19 Delta variant weighed on consumer confidence.

Market share gains in groceries and a rebound in demand for travel-related products also helped the company post $141bn in total revenue for the three months to the end of July, a 2.4 per cent increase year on year. Analysts had anticipated that sales would drop to about $137bn.

Comparable sales at Walmart’s US stores also outperformed forecasts, rising 5.2 per cent versus analysts’ prediction for a 3.7 per cent gain.

Retailers are poised to benefit from a resurgent back-to-school season with students preparing for a return to the classroom. Child tax credit payments that began this summer should give parents extra money to spend on supplies, according to analysts.

Families plan to spend a record $37.1bn in total on school-age children, up from $33.9bn in 2020, according to a survey last month from the National Retail Federation.

But analysts are closely watching a flurry of retail earnings this week for clues on whether a new wave of Covid cases in the US, attributed to the Delta variant of the virus, will dampen school supply sales and other spending.

Home Depot on Tuesday registered the highest quarterly revenues in its corporate history, even as sales growth slowed due to the cooling off of a pandemic-fuelled surge in demand for do-it-yourself products. The home improvement chain said its sales rose 8.1 per cent year on year to $41.1bn in the three months to the start of August, a slower rate than the 32.7 per cent jump in the previous quarter.

Walmart’s second-quarter results offered a glimpse into spending habits ahead of the new school year. The company said in a presentation accompanying its earnings report that it experienced a solid start in back-to-school categories.

It also said grocery sales accelerated as the quarter progressed. Apparel and travel items drew strong demand as consumers begin to get out of the house more.

Walmart, the world’s largest retailer, now expects net sales to be slightly positive in the current fiscal year, after previously estimating a decline in the low single digits.

Its namesake US stores are projected to record comparable sales growth of 5 to 6 per cent in fiscal 2022. In May, Walmart had forecast an increase in the low single digits.

Second-quarter net income fell 34 per cent to $4.28bn, or $1.52 a share. Walmart earned $1.78 a share on an adjusted basis, topping analysts’ estimate of $1.57.

Leave a Reply

Your email address will not be published. Required fields are marked *