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| - Walmart reported Tuesday a jump in second-quarter profits as e-commerce sales surged during the coronavirus pandemic and US stimulus payments boosted sales, including for discretionary items. Executives said they had generally made progress in addressing shortages of cleaning supplies and grocery staples that sold out earlier in the pandemic. But Walmart did not provide full-year profit targets and executives said the outlook remained clouded by the unpredictable course of the virus and whether Congress will enact another round of fiscal stimulus. "There's just a lot of uncertainty right now," Walmart Chief Executive Doug McMillon said on a conference call with analysts. "And so much variance in how customers are feeling about their situation. And this decision that the government has got to make about phase four investments is an important one." Net income was $6.5 billion, up nearly 80 percent from the year-ago period, boosted by a large gain based on its investment in Chinese company JD.com. Revenues rose 5.6 percent to $137.7 billion and included a lift from a 97 percent increase in Walmart US e-commerce sales. The world's biggest retailer cited robust demand for groceries and heavy use of e-commerce from home-bound consumers. Sales were strong for electronics, outdoor living items and other goods with higher profit margins, the company said. Changes to customer behavior amid social distancing protocols have led to a supply crunch for sometimes unlikely items, such as adult bicycles and fishing rods. Walmart now estimates that there are 35 million Americans who fish, up from 25 million before the pandemic, resulting in limited supplies for tackle, hooks and bobbers, executives said. The company is working on a subscription-based order-and-delivery model similar to the Amazon Prime service. McMillon said he would announce further details at a later time. The company reported higher sales at Walmart US, the company's biggest unit by far, with consumers making fewer trips to stores, but spending more. Walmart's wholesale Sam's Club saw an increase in new members by 60 percent. Retailers in the United States were helped by the $2.2 trillion CARES Act stimulus package passed in March which included one-time payments of $1,200 to Americans as well as an additional $600 in weekly benefits for unemployed people. Executives emphasized the need for adaptation in the coming period. Sales in the US tapered off near the end of the quarter as the lift from stimulus spending faded, executives said. The unemployment benefits ran out at the end of July. The back-to-school season has started sluggishly, with demand weak for backpacks and some apparel as school districts around the US move tentatively towards either reopening schools, teaching online or a hybrid model. The outlook for the holiday season is also fluid, said Walmart US chief John Furner. "We're still learning day-to-day which schools are open or planning to open, and I think every one of the holidays... we'll have to decide as we get closer," Furner said. Walmart is making contingency plans "and making sure we are ready for the customer in any way they want to shop," he added. Neil Saunders of GlobalData Retail said Walmart has done a good job of boosting its e-commerce operation, but suggested the company could be vulnerable if Washington continues to fail to enact more stimulus. "As robust as these results are, they are more a consequence of external factors than a function of things Walmart has done to engineer growth," Saunders said. "This means that as the impact of enhanced unemployment benefits and stimulus checks fades, Walmart is likely to see performance drop back." Shares dipped 0.4 percent to $135.04 in morning trading. jmb/cs
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