E-commerce has given American retail giant Walmart a spring in its step during the Covid-19 crisis: the company’s online sales almost doubled and the forced closure of restaurants meant that more Americans were buying food to cook at home.
High expectations for Prime rival
The world’s largest retailer saw its net profits rise 75 % to 6.5 billion dollars (5.5 billion euros), allowing it to beat analyst’s expectations. Its annual turnover went up 5.6 % to 138 billion dollars (120 billion euros), as comparable turnover growth in the United States almost reached double figures.
E-commerce was a huge growth factor in its American home market: online sales almost doubled in the US (+ 97 %) – the fastest growth ever for the juggernaut. Consumers went online to buy almost anything during the coronavirus pandemic, ranging from toys to electronics… but mostly food, as so many restaurants had to keep their doors closed. Walmart used this trend for its benefit, and has expanded the number of home delivery and click & collect time slots by almost a third.
The expectations for the new subscription service Walmart Plus are skyhigh, but the challenger for Amazon Prime has been delayed several times. The last mentions spoke of a launch in July, but almost at the end of August nothing has materialised. Walmart’s management now says it is almost ready with the last preparations.
Corona-effect slowing down
For the rest of the full-year, CFO Brett Biggs warns that analysts should not count on another record growth. Last semester, stockpiling and consumption cheques pushed sales artificially. It is not expected that either of the two will continue into the next quarter: in July their effect was already slowing down and turnover growth went down to its normal level of 4 %. Worse: the back-to-school boost is being delayed as more and more schools are doing the same to the start of their school year.
Covid-19 also caused 1.5 billion dollars in extra costs for Walmart, including pay rises and danger bonuses. However, the chain still managed to raise its profit margins as many families decided to spend a large chunk of their consumption cheques (being worth some 1,000 to 1,500 dollars) on more expensive things like electronics or furniture.
