Wal-Mart Stores Inc. (WMT, Financial), a major discount retail company, reported solid comparable sales and e-commerce growth for the quarter ending April 30.
The Bentonville, Arkansas-based retail company reported net revenues of $117.5 billion and earnings of $1 per diluted share, outperforming prior-year quarter results by 1.4% and 2%. The increase in net earnings was primarily driven by strong segment results in Wal-Mart U.S. and Sam’s Club.
Comparative sales in the company’s U.S. business increased 1.4% during fiscal first-quarter 2018, outperforming fiscal first-quarter 2017 results by 0.4%. Wal-Mart increased comp traffic by 1.5% during the 13-week period ending April 30, and 3% on a two-year stacked basis. Sam’s Club had stronger comparative sales with a year-over-year growth rate of 1.5%: comparative sales grew 0.1% during fiscal first-quarter 2017 and 1.6% during fiscal first-quarter 2018.
Company's e-commerce grows significantly
Wal-Mart U.S. increased e-commerce sales by 63% year over year, with the majority of the growth coming organically through Walmart.com. CEO Doug McMillon praised the company’s efforts to “combine [Wal-Mart’s] digital and physical assets to make shopping simple and easy for customers.” McMillon highlighted two Walmart.com initiatives in the company’s earnings call: no membership fee to get two-day shipping on millions of items and pick-up discounts on non-store items. The former initiative allows Wal-Mart to potentially compete with online retail giant Amazon.com Inc. (AMZN, Financial) as it offers only free two-day shipping to Prime members.
Company offers positive outlook for fiscal second quarter
Wal-Mart offered strong earnings guidance for the upcoming quarter, including a diluted earnings increase of zero to eight cents per share. Comparative sales in Wal-Mart U.S. and Sam’s Club are expected to increase 1.5% to 2% and 1% to 1.5%. The company has two positive investing signs, including consistent per-share revenue growth and a strong Piotroski F-score of 7.
Wal-Mart’s share price increased 2.92% from its previous close of $75.12 on strong earnings performance and positive earnings guidance. While the company’s share price is near a two-year high, Wal-Mart still trades slightly below its median price-sales valuation.
Disclosure: The author has no positions in the stocks mentioned.
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