Few
retailers might be able to write the history book on navigating the coronavirus
pandemic as well as Walmart Inc (WMT).
The
first chapter has already been written and investors will get to see it when
the nation’s largest retailer opens its first-quarter books this week.
It’s
a multi-themed book, for sure, and investors might expect the ups and downs of
any business thriller. Here’s a sampling of possible themes when WMT releases
earnings Tuesday morning.
*Strong sales powered by a seemingly unprecedented amount of
modern-day hoarding
*Managing
the health of workers and shoppers in tandem
*The
scramble to hire and fast-track training as many as 200,000 new workers—many of
them coming from the furloughed restaurant and retail jobs—to keep stores and
warehouses well-staffed
*The
logistical challenges of shifting stores into distribution facilities and
workers into new roles
*The
costs of rewarding frontline employees, amplifying sanitation and cleaning
routines, and reworking store footprints
*The
new demands and costs related to the delivery.
And
that’s just the high-level snapshot. The devil in those nitty-gritty details
will likely tell the real tale of how WMT struggled to keep the homes of the
masses well-stocked overtime under stay-at-home orders. It started with food,
toilet paper, and hand sanitizer disappearing from the shelves and moved to
purchases of puzzles and games to hair clippers and hair dye.
Was WMT a Winner?
In
the COVID-19 world, most retailers have been hard hit by the pandemic. But WMT
was not one of them. Taking status as an “essential retailer,” mostly because
of its food and personal-use merchandise, WMT looked like a champ in another
virtual horse race.
Walmart Earnings and Options Activity:
When
results are released Tuesday morning, WMT is expected to report adjusted EPS of
$1.12, down a penny from the prior-year quarter, according to third-party
consensus analyst estimates. Revenue is projected at $130.31 billion, up about
5% from a year ago.
Looking
at the May 22 expiration, put activity has been light overall, but heaviest at
the 120 strikes. Calls have seen more activity, with concentrations at the 130
and 135 strikes. The implied volatility sits at the 35th percentile as of
Monday morning.
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