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For Walmart’s Post-Covid Outlook, No Plus Is a Minus

For Walmart’s Post-Covid Outlook, No Plus Is a Minus

Positive vaccine developments—most recently from Moderna —are allowing investors to imagine a life after the pandemic. For big-box retailers such as Walmart , the question no longer centers around how much business they can grab but how much they can keep.

Walmart’s total revenue increased 5.2% in the quarter ended Oct. 31 compared with a year earlier, while comparable sales in Walmart’s U.S. stores increased 6.4%, much better than the 4% that analysts polled by Visible Alpha had expected. E-commerce revenue in the U.S. grew 79% and came with more modest operating losses. That translated to earnings per share of $1.80, far better than analyst consensus expectation of $1.21.

One explanation for higher e-commerce margins was the mix of products customers shopped for online. Higher-margin home and apparel products sold particularly well, though the real standout was Walmart’s third-party marketplace, which grew sales by triple digits, the retailer said on a Tuesday morning call discussing results.

Walmart said overall sales benefited from a sales rush in September that was partially driven by delayed back-to-school spending. Food sales, which lagged behind competitors in the second quarter, improved after Walmart expanded its store hours.

Many pandemic trends continued during the quarter, with shoppers making fewer store visits but buying more per trip. With coronavirus cases hitting fresh records, there is no reason Walmart shouldn’t expect a strong holiday season, particularly because its supply chain and inventory are in much better shape since the first wave of lockdowns.

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