Wal-Mart Stores wowed Wall Street Thursday with a strong quarterly profit and revenue report, boosting shares 9% in premarket trading.
Wal-Mart posted first-quarter revenue of $115.9 billion, up from $114.83 billion a year ago. On a constant currency basis, total revenue rose 4% to $119.4 billion, the retailer said. Earnings were 98 cents per share, compared to $1.03 per share in Q1 2015, well past the 88 cents per share on revenue of $113.22 billion expected by Thomson Reuters analysts.
Wal-Mart said it expects Q2 earnings per share to range between $0.95 and $1.08, with U.S same-store sales rising about 1%. Same-store sales at its warehouse Sam’s Club stores, excluding fuel, would be “slightly positive.”
Cost-cutting and improvements to stores are paying off at Wal-Mart, which provided one of the few bright spots in retail sales numbers this week. The company said that customer experience scores continued to improve.
"We are pleased to see the U.S. result, strong performance outside the U.S., membership trends in Sam’s Club and [earnings per share] results versus guidance,” Wal-Mart CEO and President Doug McMillon said in a statement. “In addition, we are 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. Another highlight is the improved inventory position that contributed to strong cash flow performance. We’re off to a good start for the year.”
Notably, Wal-Mart has kept prices low—it has to, both to live up to its “always low prices” mantra and to keep rivals at bay. That could spell trouble for grocery stores, dollar stores and rivals like Target, JPMorgan retail analyst Chris Horvers told CNBC, also calling the retailer’s results "really impressive.”
Perhaps most notable is Wal-Mart's upbeat guidance, which is in sharp contrast to Target's muted outlook earlier this week. But on a conference call Thursday, McMillion admitted the company is still struggling to grow its e-commerce business.
"Globally, on a constant currency basis, e-commerce sales and GMV grew 7 percent and 7.5 percent, respectively. Growth here is too slow," McMillon said, according to ZDNet. "We can see progress against several of the necessary capabilities we need to win in e-commerce but we're still working on a few others. We need them all to come together to see stronger growth."