Walmart US Shows Strong Performance as Online Sales Continue to Grow

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WMT
Total revenue increased 2.7% for the first quarter (Q1) of this year and sales in the United States increased by 5% thanks to a strong performance of e-commerce sales which increased by 37 %. Growth in online sales has been driven by in-store pickup and delivery, as well as Marketplace sales (a third-party e-commerce platform for Walmart partners). Walmart’s e-commerce accounts for over 12% of total sales.

The improvement in gross margin was significant compared to last year, mainly due to a change in categories purchased by customers compared to last year’s pandemic products focused on household consumables and groceries. . Other factors contributing to improved margins were lower markdowns and the impact of stimulus checks spent on non-essential items. Operating profit is up 32%. Doug McMillon, President and CEO of Walmart, said, “Membership renewals have been huge and membership numbers are at an all time high, with membership revenue increasing 13%.

Walmart US achieved strong performance

Key categories driving the 5% US market revenue growth include general merchandise and health / wellness. The average ticket (the amount spent by each customer) increased by 9.5%. According to the results report, customers continued to consolidate their in-store purchases with larger average baskets and more e-commerce purchases; it was also noted that comparable transactions declined less than in previous quarters. Stimulus packages that had a positive impact on sales in the first quarter may not have the same impact in the second quarter. Grocery remains a strong category and, according to McMillon, continues to increase its market share. While grocery sales declined slightly from last year, when customers stocked up on food, the company’s performance compared to 2019 increased by mid-teens.

The wheel of future growth

McMillon said the second half of this year is more uncertain than a normal year, but he is confident in the strength of the brand and has had a good start to Q2. McMillon spoke about Walmart’s strategy for the future, a plan called a flywheel, which is to make Walmart the best place to shop, continually add brands to the product line, and create a largest health and wellness company.

A new pledge was recently announced to support manufacturing in the United States with the goal of purchasing more than $ 350 billion worth of products locally over the next ten years. These products will be manufactured, grown or assembled in the United States, creating more than 750,000 new American jobs and avoiding more than one hundred million metric tons of carbon emissions.

Fashion could attract more customers to Walmart

Walmart recently announced plans to acquire Zeekit, a leading virtual dressing room platform that will enhance the shopping experience for customers and expand its social media presence on the fashion side.

Denise Incandela, executive vice president of apparel and private labels for Walmart US, said: Their closets, no matter their personal style or budget. The ability for shoppers to understand how an item will fit and actually look like you has been one of the biggest challenges for online fashion retailers. Incandela said, “Zeekit will help us deliver an inclusive, immersive and personalized experience to our diverse clientele. Incandela made a significant contribution to fashion selection at Walmart and by the end of 2019, the company had more than 600 fashion brands, including 150 premium fashion brands exclusive to Walmart.

In-store purchases are back to normal

As of the end of the week, Walmart announced that associates who can prove vaccination will no longer be required to wear masks. Customers and vaccinated members will be encouraged to shop without a mask, and Walmart will continue to require customers and unvaccinated members to wear face coverings in stores and clubs. Walmart is updating signage across all facilities to reflect the changes. Reopening stores to higher capacities and lifting restrictions could help boost sales as the summer months approach. Walmart and Sam’s Club vaccines are now available to customers and associates at all of its more than 5,100 pharmacies nationwide, in 49 states, Puerto Rico and Washington, DC

The United States Retail Landscape for Discount Stores

According to data from the US Census Bureau, US retail sales for April were lower than expected as they stagnated compared to March sales. The discount sector, which includes discount stores and warehouse clubs, was down 5.4% from the previous month, but still above last year’s sales by 8%. Discount stores are 5.3% ahead of last year’s sales for the first quarter and nearly 15% over 2019 revenue levels.

Discount stores stabilize as foot traffic and unique website visits decline

Almanac, a company that measures foot traffic in stores, predicts that in-store visits to Walmart, which have declined since February, will remain stable in May and June. Similarweb showed that Walmart’s unique visitors in Q1 2021 to the website were 23% lower in Q4 2020.

Even if the number of visitors to stores and websites is declining, higher purchases per transaction can prevent sales from being negatively affected. The other positive factor is the continued opening of the US market for physical retail stores as COVID-19 restrictions are lifted.


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David A. Albanese