At its U.S. stores, the company said its grocery business continued to improve with food categories delivering the strongest quarterly comp sales performance in more than three years, due in part to a lack of market deflation in food, excluding price investments.
However, Wal-Mart’s heavy discounting coupled with lower sales of higher-ticket items at the start of the quarter resulted in a slight decline in average ticket amounts.
All of Wal-Mart’s U.S. store formats showed positive comp sales to start the year, the company said.
At Wal-Mart’s Sam’s Club, comparable sales, excluding fuel, rose 1.6 percent, while traffic grew by 1.1 percent, the company reported. Digital growth as Sam’s Club “Club Pickup” increased nearly 30 percent.
With respect to its international locations, sales were $27.1 billion for the first quarter, a decrease of 3.5 percent.
Wal-Mart no longer reports an overarching global figure for its e-commerce growth, instead choosing to focus on the U.S. market. Its domestic online performance has been outpacing results overseas, the retailer has said.
Seven of Wal-Mart’s 11 international markets reported positive comps to start the year, CFO Brett Biggs told analysts and investors on a conference call.
Wal-Mart said it now expects to earn between $1 and $1.08 per share during the second-quarter, excluding a net benefit from the sale of Suburbia, the retailer’s apparel format in Mexico. Thomson Reuters analysts had forecast earnings of $1.07 a share for this period.
During the same period, same-store sales at Walmart US, excluding fuel, should grow between 1.5 percent and 2.0 percent, the company said. Sam’s Club comp sales are estimated to rise between 1.0 percent and 1.5 percent.
For fiscal 2018, Wal-Mart has said it expects to earn between $4.20 and $4.40 a share.
“Overall, [Wal-Mart’s] investments have resulted in positive comparable store sales trends and improving traffic,” Stifel analyst Mark Astrachan wrote in a note to clients prior to Thursday’s earnings. “Walmart’s success, along with broadly weakening brick and mortar shopping trends, has caused competing retailers to respond with their own pricing actions.”
On Wednesday, big-box retail rival Target reported earnings, sales and comparable sales that topped Street expectations. Target is in the midst of a multiyear turnaround effort, as it attempts to compete with Wal-Mart’s “Everyday Low Price” strategy and Amazon’s encroaching presence over the industry.
“While [Target] is not trying to directly undercut Walmart on prices, it is trying to use everyday lower prices on daily use items to drive customers into remodeled stores that provide a better experience than Walmart,” Astrachan said.
As of Wednesday’s close, shares of Wal-Mart have climbed nearly 19 percent over the past 12 months and are up about 9 percent for the year-to-date period.