Shares of Walmart (WMT -6.72%) were surging today after the retail giant turned in an all-around strong second-quarter earnings report, showing that its investments in e-commerce and grocery-pickup infrastructure are paying off.
The stock closed up 6.1%, marking its biggest gain in nearly two years.
Comparable sales at Walmart U.S. stores rose 2.8% and were up 7.3% on a two-year stacked basis, the segment's best two-year comps growth in more than 10 years. E-commerce accounted for half of the same-store sales growth as e-commerce sales in the division were up 37%, driven by strong growth in online grocery. Walmart now has 2,700 grocery pick-up locations, 1,100 stores doing grocery delivery, and said its NextDay delivery program covers 75% of the U.S. population.
At Sam's Club, comps were up 1.2%, or 4.2% excluding tobacco, as some locations stopped selling tobacco last year. Internationally, revenue rose 3.3%, to $30.4 billion in constant currency, but operating income fell from $1.3 billion to $0.9 billion due to last year's acquisition of Flipkart.
Overall revenue rose 1.8%, to $130.4 billion, slightly ahead of estimates at $130.1 billion. Adjusted earnings per share slipped, again owing to the Flipkart acquisition, from $1.29 a year ago to $1.27, but that also beat expectations at $1.22.
CEO Doug McMilllon said: "From a performance point of view, we're pleased with the strength we see in the business. Customers are responding to the improvements we're making, the productivity loop is working, and we're gaining market share."
Walmart also lifted its guidance for the year after the better-than-expected quarter. The retailer said comparable sales would be at the upper end of its previously stated 2.5%-3% range, and it raised earnings-per-share (EPS) guidance, now forecasting flat profit growth including Flipkart, or a mid-to-high single-digit growth excluding Flipkart.
Walmart's quarter and guidance raise should again quell any concerns about the impact of tariffs, the trade war, or competition from Amazon following that company's launch of free Prime one-day delivery. With its ongoing expansion of online pickup and delivery sites, as well as its NextDay service, Walmart is in the midst of a growth cycle that should continue to pay off, supporting strong e-commerce growth and solid all-around performance.