Retail giant Walmart’s second-quarter earnings increase as pandemic-induced fear force people to stock more food and shop online.
Walmart, being labeled as an essential business amid a pandemic, crushes expectations after it recorded higher-than-before earnings for its second-quarter report.
The rise, as what the company executives said during its earnings call, is due to customers making an unprecedented number of transactions online, resulting in a record-high quarterly e-commerce sale.
Pandemic drives Walmart growing earnings
As per its quarterly report released Tuesday, August 18, the retail store giant same-store sales in the United States jumped by 9.3%. Its shares grew as much as 137.63% in pre-market trading on Tuesday, marking it its 52nd week high.
The unprecedented rise in Walmart’s second-quarter sales is said to be the result of the pandemic, which forced consumers to shop less frequently but purchases more to stock up food.
Another segment that boosted its overall revenue is its online sales. Per the data, its e-commerce sales soar by 97% as well as more people make transactions online due to stay-at-home protocols, and the fear of contracting SARS-Cov-2, the virus that causes the COVID-19 disease.
At the same time, its adjusted earnings per share (EPS) hit US$1.56, slightly higher than Bloomberg’s predicted EPS of $1.24. Its Q2 revenue also skyrocketed to as much as $137.7 billion compared to Bloomberg’s forecasted result of $135.6 billion.
Overall, Walmart’s revenue increased by 5.6% or $7.4 billion from the same period last year.
Stimulus aid’s vital role
Walmart also mentioned the national government’s unemployment insurance program, presenting that it helped the company bolster its general merchandise category. Sales, however, started to fall “as stimulus funds tapered off.”
It appears that continuous financial help from the government is critical to keep the retail industry, as well as the U.S. economy, afloat during these trying times.
In a separate report, Brett Biggs, Chief Financial Officer of Walmart, told CNBC that the retail giant could again get gain another bounce if the U.S. government continue its stimulus aid program.
“Stimulus was definitely impactful to the consumer in the second quarter. We are watching what is going on in Washington, and how we are going to progress with a new stimulus package. I think it would be certainly helpful for consumers.”
Economists also warned of the said case as well.
Diana Swonk, the chief economist at Grant Thornton, told CNBC that “retrenchment” due to loss of unemployment benefits is “setting the stage for a bigger collapse in the fourth quarter.”