Walmart’s omnichannel initiatives seem to be paying off, as the retailer grew its comp sales in the first quarter, highlighted by strong e-commerce growth.
In the first quarter, as the company continued its streak of comparable sales gains, Walmart recorded net income of $3.04 billion, down from $3.08 billion in the year-prior quarter, although earnings per diluted share increased to $1 versus 98 cents year over year. Diluted earnings per share topped a MarketBeat analyst average estimate of 96 cents, although observers looked for revenues to be a bit higher.
Without taking fuel price volatility into consideration, Walmart U.S. comps gained 1.4%, driven by a traffic increase of 1.5%. E-commerce sales represented 80 basis points of the comp gain. Sam’s Club comps advanced 1.6%, with traffic up 1.1% and ticket up 0.5%. E-commerce represented 80 basis points of the comp. E-commerce growth at Walmart U.S. continued with sales up 63% and gross merchandise volume up 69%.
Total revenues were up 1.4% to $117.5 billion versus the quarter a year previous while net sales were up 1.3% to $116.5 billion. Operating income was $5.24 billion versus $5.28 billion in the period a year before, with higher operating, selling and general and administrative expenses weighing in the period year over year as the company continues investment in technology and labor.
In a conference call, Doug McMillon, Wal-Mart Stores president and CEO, asserted that the company’s online and related initiatives are starting to have an impact on overall performance.
“I’m really encouraged by how our store and club associates are embracing change,” he said. “We’re creating new solutions to help us run the business better in addition to creating a better experience for the customer in stores and online. Let me give you a few examples. A few weeks ago while visiting stores in Oklahoma City, I saw first-hand how the combination of some new in-store apps and mobile handhelds are improving our in-store processes and making life easier for associates. A grocery department manager in one store showed us how she now ensures side counter modular accuracy and in-stock with a new app we’ve developed for our mobile handhelds. With this new app, the time to complete her work has now been reduced, improving her productivity and giving her more time to interact with customers. I saw it again last week in Omaha. We have an improved process at store level that is reducing inventory levels in the back room in a meaningful way. Our team is building better tools, our associates are embracing them and the results are improving.”
McMillon added, “This is important because our key to winning starts with how we work inside the company. We’re transforming to become more of a digital enterprise. The change is starting to be visible to our customers as they use online grocery, Walmart Pay, Scan & Go at Sam’s Club and our Walmart app to skip the line when using our pharmacies and financial services in our U.S. stores. Online grocery also continues to perform well, and we’re on track to scale the offering to more stores this year in several countries, including the U.S. We’re taking steps to save customers time as well as money.”