Wednesday, July 24, 2024

Walmart sales still surging, but a chill may be on the way

by Associated Press

Walmart is raising wages for 425,000 of its 1.5 million U.S. workers and is investing $14 billion this year to speed up its distribution network as the nation’s largest retailer navigates vast industry changes that were accelerated by the pandemic.

Walmart Inc. reported a mixed performance Thursday for the fourth quarter. It swung to a loss partly due to the sale of its Japan and United Kingdom divisions. But sales surged by 7.4% in the period that includes the critical holiday shopping season. Sales at stores opened at least a year rose 8.6%, up from 6.4% in the previous quarter.

While online sales surged 69%, that is down from an 80% spike in the prior period and it was the slowest growth since the pandemic began. The company also said it expects overall sales to moderate this year. Shares dipped almost 6% in early trading.

It is the steepest one-day sell off in almost a year.

Walmart has pushed hard into fast and convenient delivery during the pandemic. But even the massive infrastructure put into place by Walmart in recent years were strained by the crush of orders from millions of people sheltering at home.

That means more yet more spending to accommodate shoppers growing increasingly accustomed at shopping from home. The company announced plans this year to build warehouses at stores where self-driving robots will fetch groceries to be picked up within an hour or less by customers. And that was before Thursday’s announcement that it was bumping related spending by $14 billion.

“Change in retail accelerated in 2020, “said CEO Doug McMillon. ”The capabilities we’ve built in previous years put us ahead, and we’re going to stay ahead. Our business is strong, and we’re making it even stronger with targeted investments to accelerate growth.”

Walmart said Thursday that it’s raising its average hourly wage to more than $15 per hour, up from more than $14 per hour. The pay raises will be concentrated in online and stocking roles. Starting March 13, pay for workers in those jobs will increase to between $13 and $19 an hour, based on a store’s location.

Walmart raised its starting hourly wage from $9 to $11 not too long ago, and that starting wage will remain. Amazon and Target have already increased hourly wages to $15 for all workers.

Walmart Inc. lost $2.09 billion, or 74 cents per share, compared with last year’s $4.14 billion profit during the fourth quarter, or $1.45 per share. Adjusted per-share earnings came to $1.39, which was well short of the $1.51 that Wall Street expected, according to a survey by FactSet.

Net revenue reached $150.98 billion, better than industry analyst projections of $148.5 billion, and easily outpacing last year’s $140.6 billion fourth-quarter revenue.

Walmart said that COVID-related costs were $1.1 billion in during the latest quarter.

Walmart is on its way to becoming one of the biggest distributors of the COVID-19 vaccine as the U.S. leans more heavily on pharmacies. Walmart operates more than 5,000 pharmacies, of which more than 4,000 are in areas that the government has designated as “medically underserved,” or that have limited pharmacy options.

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