Big retailers see virusinduced sales
Americans turned to Walmart and Home Depot for supplies and doityourself projects as they stayed close to home at a time when new cases of virus surged, resulting in soaring sales for their fiscal second quarter.
Walmart’s online sales nearly doubled in the fiscal second quarter, helped by an expansion of its online delivery services. Sales at U.S. locations open at least a year jumped 9.3%, the company reported Tuesday. With customers not going out to eat as much, they’re cooking at home, spurring sales of groceries. They’re also buying items to set up their home office or improve their outdoor area, store executives said.
Home Depot, the nation’s largest home improvement chain, reported a 23.4% increase in sales at stores open at least a year globally, helped by a frenzied pace of doityourself projects. That’s almost twice the 12.2% increase that industry analysts had projected.
Department store chain Kohl’s reported an adjusted loss that was smaller than expected, and revenue fell 23% during the fiscal second quarter. The results came as Kohl’s worked to reopen its 1,100 stores after temporarily closing them all during the start of the pandemic.
“Some parts of retailing are thriving; some parts are being devastated,“said Neil Saunders, managing director of GlobalData Retail. “It’s demonstrating a dramatic shift of how and where shoppers are spending their money. People’s lives are revolving around the home. That means food, home improvement and comfortable clothes.”
Shoppers had already begun to rely on Walmart, Home Depot and other essential retailers like Target and Amazon as lifelines for necessities during the start of the pandemic. Walmart’s online sales, for example, rose 74% for the fiscal first quarter. That trend accelerated to 97% in the second quarter and broadened the gap between traditional retailers, many of them anchor stores at malls, and bigbox operators like Walmart and Target.
Kohl’s CEO Michelle Gass told reporters on a call Tuesday that the chain should benefit from mostly being located at strip centers. It’s also looking to capture market share from rivals that are closing stores. She also says that its home furnishings are resonating even more as shoppers are focusing on their home. During the second quarter, online sales soared 58%. And roughly 50% of its online business was fulfilled in stores.
With unemployment hitting frighteningly high levels, Walmart’s ability to deliver lowpriced food, clothing and electronics strengthened its structural advantages further.
Home Depot and Walmart are setting a high bar for the rest of the retailers and are among the few bright spots in an industry mostly battered by the financial fallout of the pandemic. Target, Lowe’s, TJX Cos. and Victoria’s Secret parent will report their earnings Wednesday.
Net income for Walmart reached $6.48 billion in the quarter ($2.27 per share). Adjusted for onetime gains and costs, profit was $1.56 per share, easily outpacing Wall Street projections of $1.22.
The world’s largest retailer posted revenue of $137.74 billion, also exceeding expectations.
Home Depot earned $4.33 billion ($4.02 per share) in the quarter, which was also far stronger than the pershare projections of $3.70 from analysts. A year earlier it earned $3.48 billion ($3.17).
Home Depot’s revenue hit $38.05 billion, far exceeding the $34.94 billion Wall Street was expecting. The company easily topped last year’s revenue of $30.84 billion for the three months that ended Aug. 2.
However, those results came amid federal assistance for the millions who had lost jobs or who were furloughed. Additional unemployment payments have expired, and no new stimulus checks are expected. Walmart is already seeing an impact from the expired benefits.
“As the benefits from stimulus wane towards the end of the quarter, we saw comp sales settle into a more normal range,” said CEO Doug McMillon. He told analysts on a call that another round of stimulus money is necessary for small businesses.