[Overseas Stocks Spotlight] "Walmart Confirms Strong Omni-Channel Competitiveness in Q2"

[Asia Economy Reporter Eunmo Koo] Walmart (Walmart·WMT.US) posted results exceeding market expectations in the second quarter (May to July) of fiscal year 2021, driven by increased demand for groceries due to the impact of COVID-19. It is evaluated as reaffirming the competitiveness of its powerful omnichannel.

Walmart's total sales for the second quarter of fiscal year 2021 increased by 6% compared to the same period last year to $137.7 billion, as grocery demand rose due to the spread of COVID-19 and the benefits of economic stimulus measures expanded sales of general merchandise. This figure surpassed market expectations of $135.6 billion.

On the 22nd, Jongdae Park, a researcher at Hana Financial Investment, reported that Walmart's U.S. operations and Sam’s Club sales grew by 10% and 9% respectively compared to the same period last year, with membership sales increasing by 8%, achieving the highest quarterly growth in over five years. Despite Flipkart's operations being suspended for over a month due to lockdown measures in India, Walmart's overseas operations grew by 2%, with double-digit sales increases in China and Canada. Operating profit rose by 9% to $6.1 billion, significantly exceeding market expectations of $5.5 billion, as the proportion of high-margin general merchandise sales expanded and cost efficiency improved.

Same-store sales growth for Walmart U.S. operations recorded 9.3% year-over-year, surpassing market expectations of 5.4%. In particular, e-commerce sales increased by 97%, expanding the growth rate compared to the previous quarter (74%) and contributing 6 percentage points to same-store sales growth.

Additionally, the reduction in e-commerce losses continued in the second quarter due to operating leverage effects, following the first quarter. Researcher Park explained, "Store pickup and delivery slots have increased by about 30% since February," adding, "Effectively utilizing existing store infrastructure as omnichannel production capacity allowed flexible response to the surge in demand." As of the end of the second quarter, Walmart operates approximately 3,450 pickup stores and 2,730 same-day delivery stores in the U.S. Sam’s Club achieved a same-store sales growth rate of 13.3% and an e-commerce growth rate of 39%.

Considering macroeconomic uncertainties, Walmart did not provide annual or third-quarter guidance. Although sales began to normalize due to the depletion of economic stimulus funds, same-store sales in July still maintained a high level with over 4% growth. Although the school reopening season was somewhat delayed, expectations remain high for strong e-commerce growth in the second half of the year and additional economic stimulus measures.

Furthermore, Researcher Park stated, "In the second quarter, Walmart launched the two-hour delivery service ‘Express Delivery’ and plans to launch the membership service ‘Walmart+’ to compete with Amazon Prime, expecting continuous expansion of e-commerce market share." He also evaluated the recent collaboration with Shopify positively in terms of expanding third-party sellers.