Stock markets enjoyed sharp gains on Wednesday, and the upward momentum carried into Thursday morning. Futures contracts on most major market indexes were only slightly higher, but investors seemed to stay confident that Washington could avoid creating a big mess with the debt ceiling debate.
It's been a week of major retailers announcing their latest results, and Walmart (WMT 0.36%) added its quarterly report to the pile early Thursday. Investors were pleased enough with the numbers to send the share price slightly higher, but there was a much bigger retail stock winner that also released its latest results: luxury outerwear retailer Canada Goose Holdings (GOOS 2.25%). Below, you'll learn more about what both companies said and why consumers might be better off than news reports would suggest.
Walmart stays solid
Shares of Walmart moved higher by about 1.5% on Thursday morning. The discount retail giant reported fiscal first-quarter financial results for the period ended April 28 that seemed to run counter to the prevailing narrative of economic stress among consumers.
Net revenue climbed 7.6% year over year to $152.3 billion, with comparable store sales in the U.S. rising 7.4%. E-commerce made a significant contribution, as an increase in store pickup and delivery helped bolster sales there by 27% from year-ago levels. Despite a slight drop in gross margin, operating income soared more than 17% to $6.2 billion, and that produced adjusted earnings of $1.47 per share.
Various Walmart initiatives added to its financial success. Walmart Connect advertising, which uses Walmart's e-commerce presence to provide an ad channel for consumer products companies and other businesses, grew nearly 40%. The retailer also gained market share in its grocery segment, seeing higher-income households respond to inflationary pressures by switching to Walmart. Inventory levels also dropped to healthier levels.
Walmart doesn't expect this strong pace of growth to continue throughout its 2024 fiscal year, but investors were pleased with the guidance the retailer did give. With expectations for currency-neutral sales to climb 3.5% and operating income to grow 4% to 4.5%, Walmart remains on track and appears likely to avoid the full impact of a recession even if it does come.
Canada Goose flies higher
Meanwhile, Canada Goose Holdings saw its stock jump 11% in premarket trading Thursday morning. The luxury performance apparel retailer reported fiscal fourth-quarter financial results for the period ended April 2, and investors were happy with the progress it has made on its strategic plan for further growth.
The latest numbers from Canada Goose were encouraging. Revenue jumped 31% to 293 million Canadian dollars. Adjusted net income more than tripled to CA$14.7 million, which worked out to CA$0.14 per share in adjusted earnings.
Like many retailers, Canada Goose has worked hard to bolster its direct-to-consumer distribution channel, opening new stores and building out a more effective e-commerce presence. Those efforts paid off with outsize revenue growth for the segment, as direct-to-consumer sales jumped 23% year over year and now make up nearly 80% of total sales. Comparable sales growth came to nearly 7%, and Canada Goose opened 10 new stores over the past 12 months to bring its total store count to 51.
Interestingly, though, performance in the U.S. market was weak, perhaps in part because of the relatively warm winter. However, Canada Goose stayed fashionable within Canada and across the Asia-Pacific region, and the retailer expects to keep growing quickly with fiscal 2024 sales of CA$1.4 billion to CA$1.5 billion and adjusted earnings of CA$1.20 to CA$1.48 per share. That kind of performance could leave shareholders feeling a lot warmer toward the stock over the long run.