Jet.com to be discontinued as Walmart.com sales surge

BENTONVILLE, Ark. — Walmart posted strong sales gains across its businesses in the first quarter, with demand driven by the COVID-19 outbreak.

Unprecedented demand for products across multiple categories led to strong top-line results. But certain incremental costs negatively affected operating income, including costs associated with enhanced wages and benefits as well as safety and sanitation.

Walmart U.S. comp sales increased 10.0%, led by strength in food, consumables, health & wellness and some general merchandise categories. Walmart U.S. eCommerce sales grew 74% with strong results for grocery pickup and delivery services, walmart.com and marketplace.

Total revenue was $134.6 billion, an increase of $10.7 billion, or 8.6%.

“More than ever, the news this quarter is our amazing associates,” Walmart president and CEO Doug McMillon said in a statement. “They are rising to the challenge to serve our customers and our communities. I’m proud of how they’re adapting and performing. Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future.”

Walmart is also discontinuing Jet.com, the company said, citing the strength of the Walmart.com brand as the reason. The company did call the acquisition of Jet.com nearly four years ago critical to the acceleration of it omnichannel strategy.

Among the other highlights of the quarter:

• Sam’s Club comp sales increased 12.0%, led by in-club transactions. eCommerce sales grew 40%. Reduced tobacco sales negatively affected comp sales by approximately 410 basis points.
• Net sales at Walmart International were $29.8 billion, an increase of 3.4%. Changes in currency rates negatively affected net sales by approximately $1.3 billion. As a reminder, with the exception of Canada, all other international markets report on a one month lag.
• Consolidated gross profit rate declined 66 basis points primarily as a result of the carryover of investments in price from last year, a shift in the sales mix to lower-margin categories and channels as well as some markdowns in general merchandise.
• Consolidated operating expenses leveraged 62 basis points despite incremental costs related to COVID-19.
• Consolidated operating income was $5.2 billion, an increase of 5.6% and included lower losses in Walmart U.S. eCommerce compared to Q1 FY20. Excluding currency, operating income would have increased 6.6%.

Walmart said it was withdrawing its financial guidance for the current fiscal year because of uncertainty about the duration of the COVID-19 health crisis and its impact on the economy, shopping behavior and consumer confidence. The retailer is confident about its underlying competitive position, though.

“Our business fundamentals are strong, and our financial position is excellent,” said Walmart chief finacial officer Brett Biggs. “Customers trust us to deliver on our brand promise, and I’m confident in our ability to perform well in most any environment. While the short-term environment will be challenging, we’re positioned well for long-term success in an increasingly omni world.”