Walmart, Disaster Relief Fund Effect Continues... "Positive Short-Term Stock Trend"

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Walmart is expected to record favorable performance for the time being due to the effect of disaster relief funds. The stock price, which had been sluggish for a long time due to a decline in performance caused by the impact of COVID-19, is also expected to continue its upward trend.

On the 23rd, Walmart rose about 1.4%, from 139.90 to 141.75 this month. Although the stock price showed a sluggish trend this year due to the impact of COVID-19, the stock price rose as better-than-expected performance was announced.

Walmart recorded $138.3 billion in sales and $6.9 billion in operating profit in the first quarter, growing 3% and 32% year-on-year, respectively. Business showed a strong performance due to COVID-19 vaccinations in the U.S., and the effect of disaster relief funds contributed to sales and profitability exceeding market expectations.

By segment, the U.S. recorded sales of $93.2 billion, a 5% increase compared to the previous year. Same-store sales growth rate recorded in the 6% range, exceeding the market expectation of 0.9%. The improvement in purchase frequency was notable; looking at the trend over the past four quarters, it recorded from -14% to 3.2%. The average purchase amount recorded 9.5%, which was lower than last year’s (16~27%) but still at a high level compared to pre-pandemic. E-commerce same-store sales growth rate was 37%, contributing 60%, influenced by strong pickup and delivery services and marketplace.

Sam's Club recorded sales of $16.7 billion, a 10% increase year-on-year. Both purchase frequency and average purchase amount were favorable at 2.2% and 4.9%, respectively. The positive impact of disaster relief funds continued, and growth rates in categories such as apparel, outdoor, and sporting goods were high. E-commerce sales growth rate also recorded 47%.

The overseas segment recorded sales of $27.3 billion, down about 8.3%. This was due to the sale of overseas businesses in Argentina, the UK, Japan, etc., and excluding the impact of sales, it increased by 8.4%. Han Jugi, a researcher at Samsung Securities, said, “Flipkart, an e-commerce subsidiary in India, and Canada showed strong performance,” adding, “By reorganizing low-margin regional businesses, profitability improved, and overseas operating profit margin showed an upward trend at 4.4%.”

In the short term, the stock price is expected to show a favorable trend due to the continued effect of disaster relief funds. The recent adjustment of growth stocks also reduces the burden of buying, which is a positive factor. In the mid to long term, the company’s value is expected to steadily improve through an omnichannel strategy centered on pickup services and memberships, overseas business reorganization, and expansion of new businesses. Lee Ji-young, a researcher at NH Investment & Securities, explained, “The company plans to continue fulfillment services by newly launching fulfillment centers at the end of Q2 and early Q3,” adding, “As outings increase due to vaccinations, deferred demand is greatly increasing, so growth will continue.”

This content was produced with the assistance of AI translation services.