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Walmart Pares Gains Over Fears U.S. Stimulus Checks Won’t Return

Walmart Pares Gains Over Fears U.S. Stimulus Checks Won’t Return

Walmart Inc., whose shoppers were a major beneficiary of stimulus checks earlier this year, is bracing for a second half where pandemic-hit shoppers without continued government relief may be forced to go it alone.

The retailer’s chief financial officer, Brett Biggs, said shoppers had mostly spent the initial round of stimulus checks by July, so comparable sales growth in that month of 4% was lower than in the two previous months. A consumer survey from analysts at Stifel found that three out of four Americans have already spent a chunk of their stimulus checks.

“We started where we left off last quarter -- general merchandise continued to be really strong through the quarter,” Biggs said in an interview. “Comps were not as strong in July as stimulus dollars likely had been spent by then. Consumers are still spending money but not at pace they were in the middle of the quarter.”

Shares pared gains in early trading after initially rising on surging sales.

Walmart, like other essential retailers who remained opened during the pandemic, has enjoyed a tailwind from government stimulus checks that Americans received in mid-April, which they spent on everything from bicycles to board games while stuck at home. But as Congress continues to debate the size and timing of further stimulus spending after the initial round ended last month, Walmart’s lower-income customers could get squeezed.

Federal Reserve officials and private economists have both emphasized that a sharp drop-off in government spending would dampen any U.S. recovery. Republican and Democratic negotiators remain at an impasse over renewed coronavirus relief. President Donald Trump on Aug. 8 signed orders that extend supplementary unemployment insurance payments and offered employers a deferral on collection of payroll taxes. Still, estimates of their impact are just a fraction of the $1 trillion stimulus package proposed by Republicans, let alone the $3.4 trillion relief proposed by Democrats.

Walmart didn’t provide guidance for the back half of the year, which it attributed to uncertainty around Covid-19 and the lack of clarity around future government stimulus spending.

©2020 Bloomberg L.P.