Wal-Mart surprises with higher-than-expected Q1 revenue and profit

Wal-Mart Stores broke the retail gloom that has penetrated so many recent first quarter earnings reports as it posted higher than expected earnings and revenue gains, and gave an upbeat view for the current period.



Wal-Mart’s strong performance in a quarter that has challenged so many other retailers, including Target, offered evidence that its efforts to improve its U.S. stores are paying off. Among other things, the giant discounter has increased associate pay and taken moves to ensure its stores are more consistently in stock.



At the same time, the chain continues to spend heavily on technology to improve its digital offerings. In a statement, Wal-Mart noted it remained focused on “building the e-commerce capabilities we need to drive growth to a higher level and deliver the seamless shopping experience for customers they desire."



Wal-Mart’s total revenue in the quarter increased 0.9% to $115.9 billion.



Analysts had expected revenue of $112.7 billion, according to S&P Global Market Intelligence. Net sales at Walmart International reached $28.1 billion.



Same-store U.S. sales inched up 1%, topping estimates of a 0.5% gain, driven by the sixth consecutive quarter of positive traffic. Same-store sales by the chain’s Neighborhood Market brand increased approximately 7.1%.



Walmart e-commerce sales rose 7% and gross merchandise volume, the dollar value of all transactions, increased 7.5% on a constant-currency basis.



“We are encouraged by the Wal-Mart U.S. comp and believe it’s attributable to real improvement in our store experience,” said Wal-Mart CEO Doug McMillon on the chain’s earnings call.



Wal-Mart reported a better-than-expected profit of $3.08 billion, or 98 cents a share, down from $3.34 billion, or $1.03 a share, a year earlier, amid higher wage costs and other investments. Wal-Mart had forecast per share earnings of between 80 cents and 95 cents. Analysts anticipated 88 cents a share.



The company said earnings in the second quarter will range between 95 cents and $1.08 a share.



"Additionally, we expect comp sales for Walmart U.S. to be about +1.0 percent, and Sam's Club, without fuel, to be slightly positive for the 13-week period ending July 29, 2016," said Brett Biggs, executive VP and CFO, Wal-Mart.