Walmart (WMT 1.32%) is set to report on the first quarter of its fiscal 2020 in just a few days, and investors have good reasons to follow the report. The world's biggest retailer is growing sales at a faster clip both in stores and online, after all, but shareholders haven't yet seen solid financial returns from those gains. Meanwhile, Walmart has warned investors to expect more industry disruption, as well as aggressive spending, as it continues transitioning toward a multichannel selling posture.

With those big-picture trends in mind, let's look at what the retailing titan might have to say when it announces earnings results for the first quarter of fiscal 2020 on Thursday, May 16.

A shopper pushes a cart in a discount store.

Image source: Getty Images.

Market share checkup

Walmart's 2019 year demonstrated that the retailer can grow its influence even as consumers spread more of their spending across multiple retail channels and competitors. In the holiday quarter, customer traffic rose 1% and average check size improved by 3% to land comparable-store sales gains at 4%. That was enough to easily trounce Kroger, which has lost ground to its rival in the grocery industry lately. Walmart's results also stack up well against Target and its near-record traffic performance last year.

We'll find out on Thursday whether those positive customer traffic trends continued into 2020. Walmart said in February that higher product quality will help, since these improvements have been critical in supporting its grocery sales rebound. Winning market share over time, CEO Doug McMillon told investors, "starts with having great merchandise." Specifically, Walmart is aiming for comp sales gains of between 2.5% and 3% in the core U.S. market this year, compared to 3.6% last year and 2.1% in fiscal 2018. The chain may update that prediction on Thursday to reflect the latest demand trends.

Profitability online

The online business has delivered major benefits lately, including boosting overall sales and supporting traffic at stores as customers increasingly choose to pick up their e-commerce orders. Yet the division is far from meeting Walmart's standards for efficiency. "We need to make more progress to improve profitability," CFO Brett Biggs recently told investors.

That progress starts with building up the sales base, but it also includes pushing into higher-margin niches like home goods and apparel. Unfortunately, while the costs of these moves are immediate, investors will have to wait to find out how Walmart's earnings power will change as it transforms into a multichannel retailer. As a high-level indicator, executives are predicting that operating income will fall by around 3% this year even as sales increase by about the same percentage.

Return on investments

Walmart invested a whopping $10 billion in its business last year, and management plans to boost that figure to $11 billion in 2020. The biggest chunk of that cash will go toward adding grocery pickup and delivery offerings to thousands of its stores across the U.S. Walmart also has aggressive plans for store remodels and for adding thousands of products to its online selling platform.

Last year's market share gains suggest that these investments are generating healthy returns, so it makes sense for the retailer to double down on them. However, Walmart counted on strong industry conditions for at least part of its growth rebound, so it isn't clear how well its pivot to multichannel retailing is helping the business. That's why investors will want to follow its spending projects for signs that they're lifting sales and supporting higher profits.