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Walmart posts record online sales on pandemic boost

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BENTONVILLE, Ark. — Walmart’s second-quarter results beat Wall Street estimates, as the continued impact of the COVID-19 pandemic drove sales gains.

Comp-store sales were up 9.3% for the quarter, led by strength in general merchandise and food. Walmart U.S. e-commerce sales grew 97% with strong results across all channels. Total revenue for the quarter was $137.7 billion, an increase of $7.4 billion, or 5.6%.

The retailer’s costs were also higher, due in part to the pandemic. Walmart said its consolidated operating expenses as a percentage of net sales increased 42 basis points for the quarter. That was due to incremental expenses related to COVID-19, as well as a business restructuring in the U.S. and a discrete tax item. These costs negatively affected expense leverage by about 130 basis points. But underlying productivity in stores and e-commerce remained strong.

“I want to give a big thank you to our associates for their tireless efforts during these unprecedented times,” Walmart president and CEO Doug McMillon said in a statement. “We also appreciate the trust and confidence of our customers. We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future.”

Among the highlights of Walmart’s results for the quarter:

  • Sam’s Club comp sales increased 13.3% and its e-commerce sales grew 39%. Reduced tobacco sales negatively affected comp sales by approximately 390 basis points. Growth in membership income was the highest quarterly increase in more than five years. New member count increased more than 60%.
  • Walmart International net sales were $27.2 billion, a decrease of 6.8%. Changes in currency rates negatively affected net sales by approximately $2.4 billion. Excluding currency effects, net sales would have been $29.6 billion, an increase of 1.6%. Net sales included the effects of the government-mandated closure of the company’s Flipkart business in India for a portion of the quarter, as well as similar actions in markets in Africa and Central America.
  • Consolidated gross profit rate increased 63 basis points primarily as a result of a shift in the mix of sales to higher-margin general merchandise categories, fewer markdowns and better margins on fuel, partially offset by the carryover of investments in price from last year. Spending associated with stimulus payments in the U.S. positively affected sales of general merchandise.
  • Consolidated operating income was $6.1 billion, an increase of 8.5%. Adjusted operating income in constant currency increased 18.6%, led by strength across all operating segments, including significantly lower losses in Walmart U.S. e-commerce. Adjusted earnings per share excludes the effects, net of tax, of an unrealized gain of $0.89 on equity investments, a business restructuring charge in the U.S. of $0.10, and $0.08 for a discrete tax item.

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