Walmart Earnings and New Post-COVID Reality: Time to Reshape Once Again!

Now Macy’s reported its operating and net incomes at $215 million and $103 million respectively, representing respective YoY increases from the $4.12 billion and $3.58 billion operating and net losses reported last year. What a miracle!

But what about Walmart? This stock has been a must-have component of many investment portfolios – both individual and institutional – and the company’s management brilliantly readjusted and realigned its business to better serve the needs of its thankful consumers during the pandemic.

However, this time around the superstore’s chain Q1 2021 revenue rose to $138.1 billion, which represented just a 3% increase compared to the same quarter last year – notably shy of many of its formerly less lucky and briskly rivals. Costs and expenses, in contrast, rose rather tangible 2% to $131.4 billion. Operating income was up 32% at $6.9 billion, while net income surprisingly dropped 32% to $2.7 billion. Earnings per diluted share were $0.97. Shares of WMT are trading sideways after the publication, showing no clear direction path. Therefore, the main question is whether WMT is still a buy.

We think the Walmart management is now at the turning point. Although additional burden of sanitation and disinfection costs will persist and continue to weigh on the company’s P&L, the reality is that people now cook at home less and less as they begin dining out more and more. To overcome this apparent trend and emerge as the winner once again, Walmart has to gradually move away from Internet order and delivery concept in favor of selling more items for travelers and BBQ’ers as the country is approaching the July 4th celebration activities. If Walmart succeeds at this swift conversion, it will find new strengths in its ubiquitous presence. Otherwise it risks losing steam and lose its day-to-day competitive edge. In other words, we will know for sure what to do with WMT stock in our portfolio sooner rather than later!