WALMART NAILS EARNINGS: Walmart Has Great Holiday Season – By Todd Horwitz, Bubba Trading

 

Walmart Inc. strengthened its grip on American shoppers over the winter holidays, posting strong sales growth as the world’s biggest retailer lured customers from shrinking chains and ramped up its online grocery business.

In the U.S., the company’s comparable sales, which exclude gas but include e-commerce sales, rose 4.2% in the January-ended quarter, one of the behemoth’s biggest quarterly gains in a decade. Walmart got a boost from strong grocery sales, online orders and holiday purchases including toys. Walmart had expected quarterly U.S. comparable sales to rise at least 3% from a year earlier.

The results—following mixed economic data and sales updates from other U.S. chains—were mostly better than Wall Street had expected, and the company reiterated its financial forecasts for fiscal 2020. Shares of Walmart gained 2.2% to $102.20 on Tuesday.

Walmart’s stellar holiday shows that its recent moves to improve stores and expand online have worked. Walmart has focused its investments on offering its low-and-middle income shopping base cheaper and more convenient ways to buy groceries. It has also poured money into sprucing up stores and raising wages for workers. At the same time, it has redesigned its website and bought several high-end brands— including Bonobos and Modcloth— to draw wealthier shoppers.

Low unemployment, rising wages, and a drop-in gas prices also helped Walmart during the holidays. The government shutdown had a positive impact on Walmart’s earnings because February SNAP benefits were doled out early. That led to a 0.4% rise in sales, Walmart said. The company also stocked up on toys to lure shoppers during the first holiday season in years without Toys “R” Us. Those efforts paid off.

Moving forward, Walmart will invest in growing online instead of opening up physical stores. The company only plans to open 10 new stores this year. It already has more than 4,700 US stores, and more than 90% of the country lives within 10 miles of a Walmart. They also plan to bring curbside pickup to around 1,000 more stores this year but predicts that online sales growth will slow to 35%.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.