Walmart, the behemoth retailer, has figured out how to bypass the supply chain chaos and do an end-run around inflation. Walmart revealed that its sales grew significantly over the past three months. Wait…What? How?
On Tuesday, the mega-giant retailer reported a 9.2% increase in sales between its third quarter in 2020 and 2021. And their total revenue also increased 4.3% to $140.5 billion.
Walmart chief executive Doug McMillon explained that their momentum continues to move with strong sales and profit growth globally. He said that the store’s omni-channel focus is raising digital penetration to record levels.
“We gained market share in grocery in the U.S., and more customers and members are returning to our stores and clubs around the world. Looking ahead, we have the people, the products, and the prices to deliver a great holiday season for our customers and members,” McMillon said.
The New York Times wrote that Walmart has been able to bypass supply chain bottlenecks that have challenged its competitors. Just recently, Walmart began chartering its own ships to circumnavigate the shipping congestion. They have been aggressively trying to hire 150,000 additional workers ahead of the holidays. They reported on Tuesday that they were managing supply chain issues by rerouting products to less congested ports and they were extending overnight hours to help unload cargo.
While many of Walmart’s competitors are facing problems with empty shelves and sparse inventory, Walmart said its inventory in the United States was 11.5 percent higher heading into the holiday season. Everyone else seems to be hampered by renewed lockdowns in developing Asian economies and labor shortages in the United States. But Walmart just marches on, stocking their shelves and moving inventory.
Paul Meeks, an investor with CNBC, explained that some companies actually will not be able to ship units. If they can’t ship units, they will have disappointing earnings. And because their stocks are so expensive, they could go down. Meeks warned that they might go down not just a little bit, but a lot.
“It’s a bummer and unfortunately, there’s not any relief,” Meeks added. “It’ll also hit the top and bottom lines of some of these vendors that are selling those hot Christmas products.”
He believes that the present bottlenecks might last until 2023. On November 10th, there were a record 111 vessels that were waiting to unload merchandise in Los Angeles and Long Beach ports. Brett Biggs, the chief financial officer of the ports, said during a call with analysts that sales were aided by government stimulus checks and higher grocery prices.
Walmart is not the only firm to see higher sales as a result of inflation. The United States Census Bureau announced on Tuesday that American retail and food services sales rose by 1.7% between September and October. This is sending the message that U.S. consumers are willing to absorb inflation as the economy tries to recover from COVID-19 and the recession caused by the lockdown. However, only some will be able to absorb this…and it’s only a matter of time before it catches up to those who cannot.
Bob Unanue, the CEO of Goya Foods, revealed that his company is raising prices to deal with higher costs. This is being driven by supply chain issues. And it also means that canned food, typically consumed by low-income individuals will become harder to buy.
“We bring products like coconut water from Thailand and from Vietnam and a container with about 1300 cases of coconut water in it used to cost about $1800, $1.40 a case; it’s gone up to $20,000 to get on a container ship if you can,” he explains to Fox Business.
Analysts also expect higher levels of inflation to benefit discount chains such as Walmart as customers increasingly look for ways to save money on food, gas, and other goods.
That’s great that someone’s benefiting. Meanwhile, small businesses, the backbone of America, are going out of business. But, Biden’s really doing a great job, isn’t he?
