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Walmart wins COVID

Walmart posted better-than-expected sales and earnings, citing a 10 percent increase in sales overall, and a 74 percent increase in online sales.

“As a result of the health crisis and related stay-at-home mandates, customers consolidated store shopping trips with larger average baskets and shifted more purchases to eCommerce,” said Walmart.

The company said the quarter was broken into two phases.

In the first phase, the company saw a surge in sales of toilet paper, cleaning products, groceries and other hoard-in-place products.

“Toward the end of the quarter, another phase emerged, call it relief spending,” Chief Executive Officer Doug McMillon said in a call to analysts. Popular in that phase were bicycles, bandanas, DIY and sewing machines.

While investors cheered the news for Walmart, they also commiserated over the shutdown of so many Main Street businesses.

“Good for Wal-Mart but what about the little guy? Over 100K small businesses have shut down in the past two months. Give them a fighting chance. Let them adopt the same safety precautions as Wal-Mart and others. Let them re-open. Now,” tweeted Rob Astorino of CNN.

The future for the retailer, however, looks a bit hazy. Walmart joins another in a long list of companies that have withdrawn financial guidance from analysts because they have no certainty what the economy will do next.

From CNBC:

[Walmart CEO] Biggs said the virus has created “unprecedented variability” in the economy. He said many factors could influence the company’s sales, including the duration of the Covid-19 crisis, the amount of economic stimulus and consumer confidence.

Walmart hired 200,000 employees during the quarter, following a hiring trend for grocer-retailers. Stocking and cleaning were critical to maintaining customer confidence in the stores.

Walmart also benefited by being one of the few “social” activities that were deemed acceptable during the government-imposed shutdown. While other venues remained closed, big-box retailers provided a place to get out of the house.

A popular Facebook meme is of two police officers dragging a guy off the beach and asking him why he isn’t at Walmart.

Walmart’s earnings should be a cautionary tale about the government’s ability to pick winners and losers in an environment like a pandemic. It shouldn’t surprise us that in this environment the bigger retailers, with more resources, would do well.

We are all in this together, but some less in it than others.

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