Dive Brief:
- As the pandemic moved holiday shopping online, Walmart's U.S. comp sales growth beat expectations at 8.6%, and U.S. e-commerce sales grew 69% year over year in the fourth quarter, the retailer announced Thursday. Walmart's revenue rose 7.3% year-over-year, to $152.1 billion from $141.7 billion.
- Walmart's U.S. grocery category recorded a comp sales increase in the high single digits and benefited from expanded store hours and better in-stock levels. Online grocery orders for store pickup and delivery hit sales volume records, the retailer said.
- Walmart is also raising wages for 425,000 associates working frontline roles to an average of above $15 per hour, per the release.
Dive Insight:
Walmart's results continue to be shaped by a rising number of COVID cases during the end of 2020, capping off a robust year with a Q4 that rode on e-commerce and holiday shopping demand. During the pandemic, Walmart has leaned on its scale, existing e-commerce assets and status as a one-stop-shop to cater to consumers' evolving needs.
In Walmart's earnings presentation, the company said the stimulus money late in the quarter helped boost sales performance in categories related to home, electronics, sporting goods, outdoor living and toys.
The retailer was one of the companies that benefited the most from stimulus checks that households began receiving in late December, said Neil Saunders, managing director of GlobalData, in emailed comments. "Walmart is one of the main beneficiaries of such payments both because it is a retailer with a huge customer base, but also because its core customers are more likely than average to spend their checks on products — and many of them do so at Walmart."
The retailer's operating income also increased by 3.1% to $5.5 billion, with U.S. operating income up 17.4% to $5.2 billion. However, its international operating income was down 12.8% to $1 billion.
Walmart, which currently employs nearly 1.5 million associates nationwide, said it incurred about $1.1 billion in Q4 due to COVID-related costs — most come from employee bonuses and benefits.
"Our associates responded unbelievably to serve customers in one of the most challenging times we've faced. We have tremendous momentum having just completed a year with record sales and operating cash flow," said Walmart CFO Brett Biggs in a statement.
For the 2022 fiscal year, the company expects net sales to grow in low-single digits. Even so, the company said it intends to continue investing in automation and build supply chain capacity to bolster sales and earnings growth.
"We acknowledge the company's tempered guidance for FYE 2022, with some COVID-19 impact, however it is our continued view that the investments Walmart continues to make will, like the past cycle, generate increasing traction on all fronts, and are therefore prudent and sensible," said Moody's Vice President Charlie O'Shea.
