Shares of Walmart Inc.
WMT,
rallied Thursday, after the discount retail giant reported fiscal first-quarter results beat expectations and raised its full-year profit outlook, but provided a second-quarter earnings view that was below Wall Street forecasts.
Net income for the quarter to April 30 fell to $1.67 billion, or 62 cents a share, from $2.05 billion, or 74 cents a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $1.47 topped the FactSet consensus of $1.32.
Revenue grew 7.6% to $152.30 billion, above the FactSet consensus of $148.94 billion, as e-commerce sales climbed 26%. Walmart U.S. sales increased 7.2% to $103.90 billion, above expectations of $102.09 billion — and Walmart International sales jumped 12.0% to $26.60 billion to beat expectations of $24.89 billion, while Sam’s Club sales rose 4.5% to $20.50 billion to miss expectations of $21.04 billion.
Walmart’s stock
WMT,
hiked up 1.8% in premarket trading, enough to pace the Dow Jones Industrial Average’s gainers ahead of the open. The stock was on track to snap a four-day losing streak, in which it fell 2.3%, following a 5 1/2-month closing high of $153.12 on May 11.
Jefferies analyst Corey Tarlowe reiterated his buy rating on the stock, as first-quarter results beat expectations across the board.
“With strong traffic trends, and growing [ecommerce] and private-brand penetration, we believe [Walmart’s] well-positioned to gain share ahead,” Tarlowe wrote in a note to clients, sent out before the company’s post-earnings conference call.
Total operating costs rose less than sales, up 7.2% to $146.06 billion, as operating margin improved to 4.1% from 3.8%.
The company said Walmart U.S. gained market share in grocery, including higher-income households, while inventory declined 9% but with higher in-stock levels.
Same-store sales for Walmart U.S. rose 7.4%, to beat the FactSet consensus of a 5.2% rise, as transactions grew 2.9% and the average ticket rose 4.4%.
For Sam’s Club, same-store sales increased 7.0% to top expectations of 6.1% growth, with transactions rising 2.9% and the average ticket up 4.0%.
“We had a strong quarter. Comp sales were strong globally with e-commerce up 26%,” said Chief Executive Officer Doug McMillon. “We leveraged expenses, expanded operating margin, and grew profit ahead of sales.”
Looking ahead, the company expects second-quarter adjusted EPS of $1.63 to $1.68, which would be down from $1.77 a year ago and below the current FactSet consensus of $1.71. But Walmart raised the full-year adjusted EPS guidance range to $6.10 to $6.20 from $5.90 to $6.05, compared with $6.29 a year ago and Wall Street projections of $6.14.
Walmart’s results and outlook come a day after rival Target Corp.
TGT,
also beat fiscal first-quarter expectations, but provided a downbeat second-quarter outlook. For the full year, however, Target just reiterated its earnings guidance. Target’s stock ran up 2.6% on Wednesday.
Walmart’s stock has gained 5.5% year to date through Wednesday, while the Consumer Staples Select Sector SPDR exchange-traded fund
XLP,
has tacked on 2.3% and the Dow Jones Industrial Average
DJIA,
has edged up 0.8%.
