about 3 years ago • 3 mins
Walmart reported worse-than-expected earnings on Thursday, and investors didn’t think much of the retail chain’s service: its shares fell by their biggest one-day drop in almost a year.
What does this mean?
Walmart’s been a literal one-stop shop for Americans throughout the pandemic, selling groceries, cleaning products, and plenty of other lockdown essentials. And that was just as true last quarter, when a fresh round of government checks encouraged shoppers to buy, buy, buy – driving record sales for the retail giant.
Still, online sales didn’t grow as quickly as the quarter before – and actually grew at their slowest rate since the outbreak, uh, outbroke. Walmart’s profit missed estimates too: the retailer’s costs climbed as it hired more employees to pick and pack online orders. It’s not sure things will improve either, telling investors to expect lower profits and slower sales growth this year.
Why should I care?
For markets: This retailer is changing with the times.
While Walmart’s anticipating a return to “normal” growth in 2021, it reckons its business has changed forever. For one, it's hoping to turn its newfound ecommerce momentum into lasting gains by investing more money in supply chains and automation. And for another, it's aiming to expand its reach by venturing into advertising, healthcare, and financial services. Both moves will cost serious money though – $4 billion more than last year, to be precise – and investors are skeptical they’ll pan out.
The bigger picture: Happy employees, happy business?
Walmart – America’s biggest private employer – also announced it’d be raising its workers’ average hourly pay to $15, coinciding with a wider push for a $15 federal minimum wage. As for what that means, it depends who you ask. For minimum wage workers on $7.25, it might be a game-changer. For investors, it might threaten their investments’ profits. And for economists – well, ask them and you’ll get dragged into the age-old debate about whether it’d reduce poverty or jobs…
Keep reading for our next story...
Airbus reported better-than-expected earnings on Thursday, but the plane manufacturer can still only see the pandemic on the horizon.
What does this mean?
Here’s the good news: Airbus managed to deliver more aircraft than analysts were expecting last quarter. And since plane manufacturers only get paid in full once they actually deliver the goods, that meant the company ended up getting its hands on more cash than it expected.
Now for the bad: the travel-halting pandemic is still eating into Airbus’s profits. And despite last quarter’s strong momentum, the company is bracing itself for even more uncertainty. That might be why it’s only expecting to deliver as many aircrafts this year as it did in 2020 – a year when production was 40% below its peak. Needless to say investors had loftier expectations: they’d expected deliveries to rise, and they sent its stock down.
Why should I care?
For markets: The airplane manufacturers are locked in a tussle.
At least the French company is doing better than Boeing: Airbus not only delivered more planes than its American competitor last year, it actually took new plane orders too. All Boeing’s been taking is cancellations as it continues to reel from the trouble with its 737 Max airplanes. That means Airbus is still outpacing its arch-rival – a sure-fire way to dig the boot in after poaching the coveted title of world’s biggest aircraft manufacturer a year ago.
The bigger picture: Airbus is saving our skies.
When the aviation industry finally does recover from the pandemic-induced slump, Airbus is betting environmental concerns will be more important than ever. So it’s been upping its investments in climate-friendly airplanes, and last year even revealed three concepts for the world’s first hydrogen-fueled, zero-emission commercial aircrafts that could take to the skies by 2035. And sure, Boeing’s recently committed to delivering planes that can fly on 100% sustainable fuels by 2030, but that’ll only lower emissions by 80%. Pfft.
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