Walmart announced its first-quarter earnings this morning (May 19), crushing even the highest expectations for in-store as well as eCommerce revenue. In-store comps were up 10 percent over 2019 and eCommerce spiked 74 percent as consumers stocked up on essential and nonessential goods.
By Walmart’s fiscal calendar, the quarter began Feb. 1 and ended May 1, which encompasses the beginning of the pandemic crisis and stay-at-home orders as well as the beginning of the recovery. Analysts had forecasted high numbers from the chain, but the eCommerce spike blew away even the highest expectations. Even the company’s announcement that it will suspend earnings guidance for the end of the year had an eCommerce angle.
“The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID-19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence,” said Brett Biggs, Walmart Inc. chief financial officer, in the earnings announcement. “Our business fundamentals are strong, and our financial position is excellent. Customers trust us to deliver on our brand promise, and I’m confident in our ability to perform well in most any environment. While the short-term environment will be challenging, we’re positioned well for long-term success in an increasingly omni world.”
The eCommerce increase came from grocery sales and Walmart.com. The company has been scaling back its Jet.com business, which it purchased for $3.3 billion in 2016, and has announced that it will now close it out.
The digital spike was also helped by the April 30 introduction of Express Delivery, which delivers grocery and other items within two hours. Walmart accelerated the service as the pandemic unfolded, piloting 100 stores since mid-April. It is now available in 2,000 stores.
CEO Doug McMillon tipped his hand on the eCommerce and grocery success and the Express Delivery expansion in a memo to employees on May 1.
“I think people have also come to see that the supply chain doesn’t just extend from a distribution center to the loading dock of a store. It goes all the way to the trunk of a customer’s car or their doorstep,” he said. “The so-called ‘last mile’ of delivery has become front and center. This is just speeding up the significant change the retail industry was already undergoing. Before this crisis, we were already seeing robust adoption of online pickup and delivery in our business. As this crisis created the need for social distancing and required people to stay at home, customers embraced the pickup and delivery experience even more. My feeling is that once this crisis is more under control, people will have seen the benefits of that service and will likely continue to use it. It will become part of the ‘new normal.’”
The earnings reinforce the findings of the PYMNTS Covid-19 tracker, which predicted a seismic digital shift in late March. According to the latest PYMNTS surveys, 39.2 percent of consumers shop for retail goods online more often than they did on March 6, the first day of the study, and that continues to climb – up 10.5 percent from 35.5 percent during the last two weeks of April.
Two-thirds (66 percent) of consumers say that going to the grocery store puts them at risk of getting the virus, even though grocery stores have implemented rigorous social distancing and sanitizing procedures. Consumers feel the same way about going to the store, with nearly as many (64 percent) citing it as a reason not to shop in physical stores once they reopen.
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