• Market Crumbs

Walmart And Target Post Strong Results

Image via Mark König on Unsplash

This week has so far brought earnings from retail giants Walmart and Target. Both companies reported blowout second quarters as consumers rushed to make purchases in-person and online.

Walmart reported its largest earnings surprise in 31 years on Tuesday as U.S. e-commerce sales jumped by 97%. U.S. same-store sales rose by 9.3% as customers' average ticket rose by 27%.

"Stimulus was definitely impactful to the consumer in the second quarter, and we're watching what's going on in Washington, and how we're going to progress with a new stimulus package," Walmart CFO Brett Biggs said. "I think certainly it would be helpful for consumers."

Likewise, Target reported a strong quarter as profits rose by more than 80%, fueled by a more than 700% increase in its curbside pickup service. Sales online and at stores open for at least one year rose by 24.3%, while same-store sales increased by 10.9%. Target's digital sales nearly tripled from the same period a year earlier.

Shares of both Walmart and Target surged to new all-time highs this week on their strong second quarters.

Both Walmart and Target declined to provide an outlook for the remainder of the year. Walmart cited government stimulus, consumer confidence and the length of the coronavirus pandemic, while Target also cited the pandemic, saying for example, back-to-school shopping has been delayed because parents don't know when their kids are returning to school.

Both companies will closely be watching the progress of talks for the next coronavirus stimulus package as many of their own customers will rely on additional aid to continue to shop.

A survey from SimplyWise revealed that 38% of those who lost their job or had their pay reduced as a result of the coronavirus couldn’t last more than a month on their current savings, while about 20% of them couldn't last more than two weeks. The survey was even conducted before many of the government benefits ran out, implying the numbers could likely be higher by now.

Coming off a strong quarter filled with plenty of uncertainty, Walmart and Target are clearly among the retailers benefiting from the ways people are shopping amid the pandemic.

Leftover Crumbs

  • Rising rates hit mortgage demand. Total mortgage application volume fell 3.3% last week as the average contract interest rate for a 30-year fixed-rate mortgage rose to 3.13% from 3.06%, according to the Mortgage Bankers Association. Refinance volume fell 5% for the week but remains 38% higher than the same period a year ago, while mortgage applications to purchase a home rose by 1% and remain 27% higher than the same period last year. "Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks," MBA economist Joel Kan said.

  • Zoom set to expand. Zoom announced that the Amazon Echo Show, Facebook Portal and Google Nest Hub Max will all offer its videoconferencing software later this year. The arrangement is a big change for all companies involved as they each had previously used their own in-house software and hardware for videoconferencing. The Facebook Portal will be the first to get the integration, with a rollout planned for September.

  • CEOs averaged a 14% raise in 2019. According to a report from the Economic Policy Institute, CEOs at the top 350 U.S. companies by sales earned an average of $21.3 million in 2019, marking a 14% increase from 2018. "Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs' use of their power to set their own pay," the report said. "And this growing earning power at the top has been driving the growth of inequality in our country."

  • Reliance ups fight with Amazon. As Amazon expands into the online pharmacy business in India, India's Reliance Industries has acquired a majority stake in online pharmacy Netmeds for 6.2 billion rupees, or about $83 million. Reliance, which is India’s most valuable company, will have a 60% stake in Netmetds, which sells over-the-counter medication and more than 70,000 prescriptions drugs. Consultancy Frost & Sullivan estimates the market for online pharmacies could grow to 250 billion rupees by 2022.

  • Scotiabank pays fine. Bank of Nova Scotia is paying more than $127 million to resolve regulatory charges in the U.S., including alleged price manipulation in precious metals futures contracts. As part of the deferred prosecution agreement, Scotiabank will have to keep an independent compliance monitor for three years. "The Bank fully reserved for the payments in these resolutions in prior quarters," Scotiabank said. "In order to maintain the trust of our stakeholders, we must adhere to trading-related regulatory requirements and compliance policies. We are committed to adhering to these standards."