- Walmart crushed estimates for its second-quarter earnings this week, which the company contributes to stimulus checks and unemployment benefits of the CARES Act.
- Without more relief from the government, Walmart is unable to provide any outlook for the remainder of the year, as consumers may not have any money to spend.
- The Senate adjourned for nearly a month last week without passing another coronavirus relief bill.
Last week, the Senate adjourned without passing a new relief bill to assist the millions of Americans that have been financially impacted by the novel coronavirus pandemic. The US unemployment rate was at 10.2% last month, which was down from a record high of 14.7% in April, but still higher than any point during the Great Recession. Meanwhile, the extra $600 in weekly unemployment benefits of the Coronavirus Aid, Relief, and Economic Security (CARES) Act expired at the end of July, and the government failed to pass any new legislation to take its place.
Members of Congress on both sides of the aisle have acknowledged more relief is needed as the virus continues spreading rampantly throughout the United States, but the Senate’s current recess does not end until September 8th. As a result, Americans will likely go the rest of the month without any additional assistance, but some of the country’s biggest retailers are already seeing the effects of the government’s lack of action.
On Tuesday, Walmart reported second-quarter earnings that blew past expectations, with a 9.3% jump in same-store sales and a massive 97% increase in online sales. Walmart CEO Doug McMillon said that customers spending more time at home contributed to “strong sales in categories like TVs, computing, and connected home,” and also noted that “families continue to prepare more meals at home” with many restaurants still closed.
Despite the encouraging figures, Walmart declined to provide a financial outlook for the rest of the year. Speaking to CNBC, Walmart CFO Brett Biggs said that government stimulus is one of the reasons the company can’t accurately predict what the rest of 2020 will look like. “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,” Biggs said. “I think certainly it would be helpful for consumers.”
The $1,200 direct payments and expanded unemployment benefits were what kept the economy from stalling out in the early weeks of the coronavirus pandemic when much of the world was forced to shut down. Millions of Americans are still unemployed and even those who kept their jobs are undoubtedly being extra cautious, as there is still no end in sight to this pandemic. Without another relief package to encourage consumer spending, it’s unlikely that Walmart or any other retailer will continue to bounce back so aggressively in the months to come.
