NEW YORK – Walmart and other United States retailers expressed optimism for the year ahead yesterday following a strong first quarter fuelled in part by government stimulus payments, even as questions loom about inflation and labour supply.
The world’s biggest retailer Walmart reported much better-than-expected profits, although sales growth moderated somewhat compared with the huge increases earlier in the pandemic.
Results from Home Depot and Macy’s also topped estimates, with executives pointing to a lift from widespread vaccinations.
“We’re encouraged by traffic and grocery market share trends,” said Walmart chief executive Doug McMillon.
“In the US, customers clearly want to get out and shop.”
McMillon said government stimulus payments “had an impact” during the quarter, and “we anticipate continued pent-up demand throughout 2021”.
Profits in the quarter ending April 30 came in at US$2.7 billion (RM11.1 billion), down 32% from the year-ago period. Revenues were US$138.3 billion, up 3%.
In the most recent quarter, Walmart’s US division scored 6% growth in comparable sales – an impressive level that is above analysts’ expectations, but which lagged the 10% growth in the first quarter of last year.
That was the period when Walmart’s designation as an “essential store” at the height of the pandemic in the US allowed it to gain market share from retailers forced to shut or modify operations.
A similar trend was seen in its US e-commerce sales, which grew 37% in the most recent quarter, half the level in the year-ago period.
The company pointed to tight supply of some goods, such as adult bicycles and consumer electronics.
Executives said they are working to manage broad-based inflation, but noted that the company’s broad assortment of goods allows it to offset price increases on select items with lowered prices on others.
Walmart also increased some of its full-year profit projections, as executives expressed confidence in the market in the latter part of the year.
“Storm”-level demand
Home Depot posted its latest batch of strong results in the wake of a boom in home-improvement demand during the pandemic.
Net income surged 85% to us$4.1 billion on a 33% jump in revenues to US$37.5 billion.
The gains were driven by strong demand across the company’s portfolio, which caters to both “do-it-yourself” consumers and professionals, such as carpenters.
Higher costs of lumber and copper have also lifted sales.
In the case of lumber, the company is having no trouble passing on prices more than four times the year-ago level, executives said on a conference call.
“As soon as that product hits our stores, it sells,” said president Edward Decker, who likened it to a “storm” environment, where demand is exceptionally high.
Macy’s has been impacted by a “tightening job market”, said chief financial officer Adrian Mitchell, highlighting a risk in an otherwise strong report.
The department store chain scored earnings of US$103 million compared with a US$3.6 billion loss in the year-ago period. Revenues jumped 56% to US$4.7 billion.
Chief executive Jeff Gennette cited the stimulus and lift from vaccinations as drivers of increased sales.
“The consumer is healthy with lower debt and strong household savings,” said Gennette on a conference call.
“After a year of reduced activity, consumers are ready to get out, reconnect with family and friends and celebrate life.”
Shares of Walmart rose 2.2% to US$141.91, while Macy’s dipped 0.4% to US$19.09 and Home Depot fell 1.0% to US$316.75. – AFP, May 19, 2021
