Please ensure Javascript is enabled for purposes of website accessibility

5 Biggest Takeaways From Walmart's Blowout First Quarter

By Danny Vena – Updated May 21, 2020 at 4:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Consumers turn to the world's largest retailer for toilet paper, disinfectant, and hand sanitizer during the ongoing pandemic.

Big-box retailer Walmart (WMT -0.65%) reported its fiscal 2021 first quarter earnings (for the period ended May 1, 2020) before the market opened on Tuesday, and the results far exceeded even the most enthusiastic forecast. Consumers flocked to the retailer in droves during the pandemic, helping generate one of the retailer's best performances in recent memory across a variety of metrics.

Here are five of the biggest takeaways from Walmart's blowout fiscal 2021 first quarter.

Walmart associate wearing a yellow vest and a mask.

Image source: Walmart.

1. Revenue growth soared

Walmart reported revenue of $134.6 billion, up 8.6% year over year. Excluding the impact of foreign currency headwinds, the results were even more impressive, growing to $135.9 billion, an increase of 9.7%. To put that into the perspective of Wall Street's expectations, analysts' consensus estimates were calling for revenue of just $130.31 billion.   

The results were driven by strong demand for food, consumer staples, health and wellness products, and general merchandise.

2. Comparable-store-sales shine

Comparable-store-sales (excluding fuel) in the U.S. climbed 10% during the quarter, delivering its best performance in nearly 20 years.  Customer buying behavior during the pandemic fueled the better-than-expected results.

It wasn't just Walmart that got a boost from pandemic-related shopping. Comp sales at Sam's Club increased 12%.

3. E-Commerce sales were the headliner

With the widespread stay-at-home orders, many customers turned to the company's website for essential purchases, and it showed in Walmart's robust online sales growth. E-commerce transactions at Walmart U.S. grew a whopping 74% year over year, reporting strong results from grocery pickup and delivery services. Sam's Club also saw an impressive increase in online traffic, with e-commerce sales climbing 40%.

Walmart also said that due to continued strong results from Walmart.com, it will discontinue using the Jet.com brand. Investors will recall that the purchase of the online competitor nearly four years ago helped to jump-start Walmart's e-commerce success.

A smartphone showing a shopping cart image in front of a blurred background.

Image source: Getty Images.

4. Incremental costs hit the bottom line

Walmart had additional expenditures that hit its bottom line results, as incremental costs associated with the pandemic ate into profits. The company reported that it spent an additional $900 million in COVID-19 related expenses, which included approximately $755 million in cash bonuses issued to its associates, as well as increased hourly pay of $2 per hour. The company said it's a "reasonable assumption" that it will spend a similar amount in the upcoming second quarter.

Just last week, Walmart and Sam's Club announced a second round of employee bonuses, with payouts of $300 for each full-time hourly associate and $150 for each part-timer. The price tag for the bonus payments is expected to come in at about $390 million. 

Walmart delivered GAAP earnings per share (EPS) of $1.40, while its adjusted EPS came in at $1.18. Analysts' consensus estimates were calling for adjusted EPS of $1.17.

5. A minor change to e-commerce calculations

Walmart announced that beginning with the just-reported first quarter, the company has revised the definition of what constitutes e-commerce net sales, which now includes certain pharmacy transactions. As a result, the company issued revised prior-period amounts for both Walmart and Sam's Club.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Walmart Stock Quote
Walmart
WMT
$132.25 (-0.65%) $0.86

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.