New York (CNN Business)Walmart sales got a big boost last quarter as shoppers spent their government stimulus checks on home goods, electronics and lawn care products, the company said Tuesday.
Walmart's sales at US stores open for at least one year increased 9.3% to $93.3 billion during the three months ending on July 31, compared with the same stretch last year. Walmart's online sales boomed, growing 97%. Walmart's profit increased 79.4% to $6.4 billion.
The company, the largest retailer in the world, was deemed an "essential" retailer and stayed open throughout the pandemic, even as other retail chains and restaurants shut their doors.
While consumers have cut back on some discretionary spending during the pandemic, they continue to buy food and household goods. Walmart's grocery business makes up more than half of its sales.
"With significant operating restrictions for restaurants across the country, families continue to prepare more meals at home, and our business has benefited from that trend," Walmart CEO Doug McMillon said on a call with analysts. A "focus by customers on entertaining themselves at home and investing in their homes and yards" during the pandemic also drove sales, McMillon said.
But the pandemic has led to some increases in costs for businesses like Walmart. The company, the largest private employer in the United States, said it hired more than 500,000 new workers since the beginning of the year. Walmart said it spent $1.5 billion on coronavirus-related costs, including three cash bonuses for employees, during the quarter.
Retail analysts say the government's stimulus package and enhanced unemployment benefits of an additional $600 a week boosted Walmart's sales. The enhanced benefits expired at the end of July.
As the stimulus tapered off in July, sales growth slowed down slightly, Walmart said.
Walmart's investments in e-commerce paid off last quarter. To compete with Amazon, Walmart had built out its curbside pickup and home delivery network for groceries in recent years. Walmart has 3,450 store pickup locations, and 2,730 stores offered same-day grocery delivery.
"Pickup and delivery services continued to experience all-time high sales volumes," the company said.
Walmart's (WMT) stock rallied around 5% in premarket trading after its earnings report. Heading into Tuesday, Walmart's stock had gained 14% this year.
Walmart will emerge as one of the "winners from the Covid-19 crisis and seems well positioned" to grow in the future because of its low prices at a time when the economy is weak and millions of Americans are out of work, Scot Ciccarelli, analyst at RBC Capital Markets, said in a research note last week.
Home Depot (HD) also reported strong sales Tuesday. Sales at stores open for at least one year increased 23.4% during its latest quarter compared with the same stretch a year ago.
While Walmart and Home Depot have surged in recent months, the pandemic has slammed much of the retail industry and forced a growing list of brands into bankruptcy.
So far in 2020, more than 6,000 stores have said they will permanently close, according to Coresight Research, a retail research and advisory firm. It anticipates closures will snowball and set a new annual record this year of as many as 25,000, breaking last year's record 9,302 closures tracked by the firm.
