almost 3 years ago • 3 mins
Retail giant Walmart posted better-than-expected quarterly earnings on Tuesday, as American shoppers took their newfound government-funded shopping habits in stride.
What does this mean?
Walmart’s sales jumped 6% last quarter compared to the same time last year – much more than the 2% increase analysts were anticipating. As for why, take your pick: it might’ve been the extra spending encouraged by the $2,000 stimulus checks, the extra market share Walmart poached from its grocery competitors during the pandemic, or simply the pent-up demand of a post-lockdown customer. Speaking of which, the sorts of products shoppers were buying shifted too: teeth whitener was a particular hot-seller, as newly unmasked customers prepared to flash their pearly whites once more.
Needless to say, all this spending is making Walmart feel pretty upbeat about the future: the retailer’s now gone from predicting a slight drop-off in earnings for the year to a “high single-digit percentage” rise.
Why should I care?
For markets: Ecommerce isn’t going anywhere.
Walmart likewise saw its ecommerce sales increase by 37% compared to the same time last year, even though online sales growth had been expected to decelerate as shoppers headed back into stores. That’ll come as a relief to Walmart: the company’s making moves to improve its ecommerce efforts by opening up its online marketplace to non-US vendors, in hopes it’ll tap into China’s vast network of manufacturers and close the gap with archrival Amazon.
Zooming out: Fashion is back in fashion.
Ecommerce expansion isn’t Walmart’s only new venture: it’s now buying a virtual fitting room business in an effort to sell more fashion-forward apparel. And it might be onto something: fresh US retail data shows that sales of clothing and accessories in April surged 727% from the year before. That’s certainly gone down well at department store Macy’s, which reported a surprise profit on Tuesday and upped its forecast for the rest of the year.
Keep reading for our next story...
The International Energy Agency (IEA) might’ve killed off the fossil fuel industry on Tuesday: it warned that energy companies need to halt new oil and gas projects to keep climate change in check.
What does this mean?
The International Energy Agency (IEA) advises 30 member states – including eight of the world’s top ten economies – on all things energy-related. Its recommendations often help both the government and the industry to plan their next moves, which is why this week’s special report might’ve knocked them for six.
The IEA confirmed that countries’ current policy pledges fall well short of what’s needed to achieve global net-zero carbon emissions by 2050 – not to mention to meet the Paris Agreement’s key objective of keeping planetary warming within 1.5 degrees Celsius. The only solution, according to the agency, is to put an immediate stop to the sort of oil and gas exploration it was originally set up to promote.
Why should I care?
For markets: This wasn’t the plan.
The IEA’s roadmap is in contrast with Big Oil’s own projected path. While the likes of BP, Shell, and Total are working toward a similar timeline for net-zero emissions, they’re also planning to seek out new fossil fuel fields for years to come, arguing that the projects meet the needs of emerging economies in Asia and Africa. But the IEA doesn’t think producers are prepared for how much faster global use of fossil fuels needs to fall by 2050: coal demand by 90%, oil by 75%, and gas supply by 50%.
The bigger picture: Renewables just got lucky.
Energy majors might not have welcomed the IEA’s report, but its outlook should be a boon for the renewable energy industry. The agency’s plan calls for a huge rise in international spending on low-carbon technology – from $2 trillion in annual investment today to $5 trillion by 2030. Solar and wind would be the big winners from the proposal, together accounting for almost 70% of electricity generation by 2050.
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