What’s going on?

• Walmart reported worse-than-expected earnings, driving its shares to fall by their biggest one-day drop in almost a year.

What does that mean?

• With groceries, cleaning products, and plenty of other lockdown essentials, Walmart’s been a one-stop shop for Americans throughout the pandemic; especially when fresh government checks encouraged shoppers to buy last quarter.
• Meanwhile, online sales at Q4/2020 grew at their slowest rate since the outbreak, driving the rising employment costs for picking and packing online orders, which makes Walmart miss profit estimates.
• It’s not sure things will improve either, telling investors to expect lower profits and slower sales growth in 2021.

Why should I care?

For markets: The core business is changing

• While Walmart’s expecting to return to “normal” growth in 2021, it reckons its business has changed forever:
  • Its newfound ecommerce momentum is expected into lasting gains by investing more money in supply chains and automation.
  • It’s aiming expansion by venturing into advertising, healthcare, and financial services.
• Both moves will cost a serious $4 billion more than last year – and investors are skeptical they’ll succeed.

The bigger picture: Minimum-wage raise

• Walmart announced it’d raise its workers’ average hourly pay to $15, matching a wider push for a $15 federal minimum wage.
  • For minimum-wage workers on $7.25, it might be a game-changer.
  • For investors, it might threaten their investments’ profits.
  • For economists, the age-old debate is raised about whether it’d reduce poverty or jobs…

Content source: Finimize (2021) Checked Out. Available at: https://www.finimize.com/wp/news/checked-out/ [Accessed on February 22, 2021]