Wal-Mart Stores Inc on Thursday
reported higher-than-expected quarterly sales at established U.S. stores, as
investments to bring more customers into the discount retailer paid off and a
bigger push into e-commerce boosted online purchases, sending its shares
flirting near a 52-week high.
Wal-Mart and analysts said the
company is benefiting from a $2.7 billion investment to increase entry-level
wages and enhance the training of its workforce, which has led to better
stocked shelves and cleaner stores. It said store visits rose 1.5 percent, the
tenth consecutive quarterly increase.
Earlier in the day, shares of
Wal-Mart rose to $77.40 - a 52-week high. They were trading at $77 in mid-day.
Wal-Mart's efforts to close the
gap with rival Amazon.com has started gaining momentum even as other retailers
like department store chains struggle. Online sales for the Bentonville,
Arkansas-based retailer rose 63 percent in the first quarter, which was higher
than 29 percent growth in the fourth quarter and 20 percent in the third
Online sales added 0.8 percentage
points to the first quarter comparable sales gain. Growth in the business has
been picking up after Wal-Mart said in October it would slow down new store
openings to focus on expanding its e-commerce business.
U.S. e-commerce chief Marc Lore
told reporters in a call that online sales growth was boosted by offering free
two-day shipping without membership fees, and higher repeat orders.
"We need to scale our
e-commerce business further and see some additional strength in our store comps
to deliver the results we know we're capable of," said Chief Executive
Officer Doug McMillon.
The company said most of the
internet sales growth was from existing online operations rather than from
acquisitions. Wal-Mart, which acquired Jet.com in 2016, this year alone has
snatched up online retail startups Shoebuy, Moosejaw and Modcloth, and is currently
in talks with small online clothing retailer Bonobos.
"Wal-Mart's long string of
investments in labor and e-commerce, including acquisitions, are enabling
modest market share gains," John Zolidis, director equity research with
the Buckingham Research Group said.
Wal-Mart's performance, along
with rival Target's results on Wednesday, bucked a string of weak results from
retailers Macy's Inc and J.C. Penney. Target reported higher-than-expected
quarterly earnings and sales.
Wal-Mart said sales at U.S.
stores open at least a year rose 1.4 percent, excluding fuel price
fluctuations, and was the 11th consecutive quarterly increase. Analysts were
expecting a 1.3 percent increase, according to Consensus Metrix.
Wal-Mart is aggressively
investing in making prices more competitive compared to rivals. It has asked
vendors to offer grocery prices that are 15 percent lower than competitors.
Wal-Mart's U.S. Chief Executive
Greg Foran said comparable sales in food and grocery improved during the
quarter on lower food deflation, without sharing details. Grocery accounts for
nearly 53 percent of overall revenue for the retailer.
"Wal-Mart's commitment to
value pricing is driving traffic and growth in grocery and aggressive online
strides are impacting comparable sales," Cowen & Co's senior research
analyst Oliver Chen said in a note.
Earnings per share was $1 for the
quarter ended on April 30, exceeding the analysts' average estimate of 96
cents, according to Thomson Reuters I/B/E/S. Consolidated net income fell to
$3.04 billion from $3.08 billion due to a higher tax rate.
Quarterly revenue rose 1.4
percent to $117.5 billion, slightly lower than analysts expectations of $117.7
billion due to a stronger dollar, which reduces the value of overseas sales.
Revenue grew 2.8 percent on a currency neutral basis.
For the second quarter, Wal-Mart
expects an increase of 1.5 percent to 2 percent in U.S. same-store sales. It
forecast earnings per share of $1 to $1.08, against market expectations of
here for the original article from Reuters.