Walmart posted its biggest-ever growth in online sales on Tuesday as shoppers placed orders for everything from electronics and toys to groceries from their homes amid the COVID-19 pandemic.
The near-doubling of online sales in the second quarter helped the retailer trounce Wall Street expectations for quarterly profit and same-store sales.
The results showed that the unprecedented spike in demand seen by big-box retailers at the peak of the coronavirus lockdowns has remained strong even as restrictions ease, with shoppers using their stimulus checks to shop for discretionary items like sneakers and clothes. This also helped Walmart reduce the number of markdowns or discounts.
However, as stimulus funds tapered off, sales at Walmart returned to normal, recording only a 4 percent rise in comparable sales in July. Shares of the company were up 2 percent in pre-market trading.
Walmart has incurred millions of dollars in COVID-19 expenses that include higher wages for warehouse workers and bonuses for store employees, as well as more spending to keep its facilities clean.
Despite higher costs, Walmart said its margins improved in the quarter, helped by stimulus checks that had consumers spending on bigger ticket items like electronics, home furnishings, and apparel.
Gross margins rose to 24.9 percent in the quarter edging past expectations of 24.24 percent.
For Walmart, its online business has been a bright spot, seeing rapid growth as it expands its same-day delivery options and pick-up services.
Walmart’s U.S. e-commerce sales rose 97 percent in the quarter. Sales at U.S. stores open at least a year rose 9.3 percent, excluding fuel, in the quarter ended July 31. Analysts had estimated a gain of 5.73 percent, according to IBES data from Refinitiv.
“If they [Walmart] can sustain a nearly 100 percent growth in digital sales, they will be taking share away from Amazon and their competitors in the digital arena,” said Hilding Anderson, head of retail strategy at Publicis Sapient.
Operating income rose 8.5 percent to $6.1 billion in the quarter, while adjusted earnings per share of $1.56 also topped the average estimate of $1.25.
Total revenue rose about 5.6 percent to $137.74 billion.
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