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Walmart sales jump as pandemic brings ‘unprecedented demand’

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Via Financial Times

Walmart said “unprecedented demand” for essential products during the pandemic had caused its sales to spike as the world’s biggest retailer disclosed it had taken on 235,000 workers in the US to cope with the surge.

Sales of toilet rolls, surface cleaners and grocery staples helped Walmart’s like-for-like revenues in the US, its largest market, jump 10 per cent in the last quarter from a year ago.

Doug McMillon, chief executive, said on a results briefing call that Walmart
had been selling in two or three hours what it would normally sell over two
or three days.

After the initial rush to stockpile essentials, customers in lockdown later spent heavily on entertainment, education and exercise products, Mr McMillon said. Categories to perform especially well included video games and bicycles. Sewing machine sales also picked up as customers took to making their own face masks.

Americans had also been spending stimulus cheques from Washington on
items from toys to televisions. “Discretionary categories really
popped towards the end of the quarter,” Mr McMillon said.

The results from retailer which operates 11,500 stores globally are the latest sign that the coronavirus crisis is widening the gulf between winners and losers in the US retail sector. Separately, department store chain Kohl’s on Tuesday reported a 44 per cent decline in first-quarter net sales.

While the crisis is a big business opportunity for Walmart, it has also put the retailer in the public spotlight, particularly over the treatment of staff. Workers’ rights groups have criticised the company over health and safety in stores and its sickness policies.

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Walmart said on Tuesday that it had incurred costs related to Covid-19 of $900m. Bonuses for staff cost $755m, and Walmart also pointed to measures it had introduced to improve store safety, including providing face masks and gloves for workers and installing sneeze guards at checkouts.

Before the recent hiring surge, Walmart was already the country’s biggest employer, with 1.5m staff in the US and another 700,000 overseas. Warehouse workers and online shopping specialists, as well as in-store staff, are among the additional employees the group has taken on — the majority on a temporary basis — to meet the jump in demand during the crisis.

Despite the quarterly sales surge, Walmart joined other large companies in withdrawing financial guidance for the year. Brett Biggs, chief financial officer, cited “significant uncertainty” in consumer confidence and employment trends, as well as the duration of the pandemic.

Walmart produced revenues of $134.6bn in the three months to the end of April, 8.6 per cent more than a year ago. Net income jumped from $3.91bn the same period a year ago to $4.074bn.

Shares in Walmart are up 8.3 per cent for the year compared with a 8.7 per cent decline in the S&P 500 index. They gained another 4 per cent in pre-market trading.

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