Walmart (NYSE:WMT) shares were up 3% in premarket trading Thursday morning following another solid earnings report that topped analysts' expectations.
Overall revenue in the first quarter was up 1.2% to $123.9 billion, driven by strong performance at U.S. stores. That was below estimates of $125 billion, but adjusting for foreign currency exchange rate fluctuations, revenue grew 2.5% to $125.8 billion. On the bottom line, adjusted earnings per share fell by $0.01 to $1.13 as last year's Flipkart acquisition weighed on results, but still easily beat analysts' consensus expectation of $1.02.
Comparable sales in Walmart's core U.S. segment rose 3.4%, the company's best first-quarter result on that metric in nine years. That growth was driven by many of the same initiatives that have propelled the retailer's improving performance in previous quarters.
E-commerce sales jumped 37%, due in large part to the expansion of Walmart's online grocery pickup and delivery programs. Grocery pickup is now available at 2,450 stores, and 1,000 stores offer delivery. The company also noted contributions from the home and fashion categories on Walmart.com, and health and wellness more generally. Operating income at Walmart U.S. rose 5.5% to $4.1 billion, leveraged by the comparable-sales growth as well as lower transportation costs.
At Sam's Club, same-store sales rose 0.3% (excluding fuel), or 3% after adjusting for the company's decision to stop selling tobacco at a number of locations. Analysts had been expecting a 1.6% increase. E-commerce sales were up 28% at the warehouse chain, and adjusted operating income rose 19%, lifted in part by an increase in membership.
Internationally, a strong dollar weighed on results as revenue fell 4.9% to $28.8 billion, though after adjusting for foreign currency moves, it was up 1.2%. Comps rose in seven of its 10 international markets, but all 10 markets would have had positive comps after adjusting for the Easter holiday shift.
Operating income in the segment fell 38% to $790 million, but that was mainly due to the addition of Flipkart, which continues to operate at a loss. Management said it was disappointed that the merger between its U.K. subsidiary Asda and supermarket chain Sainsbury's was recently blocked by regulators, which has forced it to rethink its strategy in the U.K.
CEO Doug McMillon summed up the quarter, saying, "We're changing to enable more innovation, speed and productivity, and we're seeing it in our results. We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S."
Walmart neither updated its full-year guidance nor provided a view into the current quarter, but on the earnings call, management did tout initiatives like the expansion of online grocery delivery and pickup, and its plan to roll out one-day delivery with no membership fee to 75% of the U.S. by the end of the year.
It's clear Walmart will continue to look to the online channel to spur its growth.