Shares of America's largest employer rose over 2% in pre-market hours as the earnings conference call kicked off, edging back over the $100 mark.
The "Bully of Bentonville" said adjusted earnings for the three months ending in April, the retailer's fiscal first quarter for the 2020 financial year, came in at $1.13 per share, well ahead of the $1.02 forecast. Reported earnings rose 84.7% from last year to $1.33 per share, reflecting a 20 cents per share gain from the group's holding in China-based online retailer JD.com (JD) .
Revenue was a sore spot tempering the stock pop, coming up to $123.925 billion, missing analysts' forecast of $124.51 billion, as currency moves clipped the top line. Excluding currency impacts, Walmart said, revenues rose 2.5% to $125.8 billion.
The share reaction seems to be carried by strong U.S. same store sales growth, rising 3.4%, which reflects the strongest first quarter in nearly a decade.
"We're changing to enable more innovation, speed and productivity, and we're seeing it in our results," CEO Doug McMillon said. "We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S. Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank them for a strong start to the year."
E-Commerce was also noted for its strength which could be set to grow further as the company ups its efforts to compete with Amazon (AMZN) on next day shipping convenience.
"U.S. e-Commerce sales growth remained strong sequentially, growing 37% in 1Q (on top of +33% y/y growth in 1Q18), following +43% growth in 4Q, leaving WMT on track to achieve its +35% y/y growth target for the full-year," KeyBanc Capital Markets analyst Edward Yruma noted. "WMT also noted that its launch of next-day delivery without a membership fee was included in its guidance assumptions provided in February."
Margins also remained strong, encouraging investors looking at Walmart's e-Commerce efforts.
"Operating income grew 5.5% and gross margin came in better than expected due to a better merchandise mix in both stores and e-Commerce and less pressure from transport costs, offset by continued price investments," Yruma noted. "WMT also saw 14 bps of expense leverage reflecting strong Walmart U.S. sales and store productivity as well as leverage from International and Sam's Club."
The company's guidance, which will be updated in the second fiscal quarter, will be one to watch given the investments in e-Commerce and potential tariff impacts that could make for noisier results down the road.
"Based on current exchange rates, we estimate sales will be negatively affected by about $1 billion, higher than anticipated at the beginning of the year," management said, highlighting some of the remaining noise. "As is our practice, we will update certain full year guidance with our second quarter release."
Of course, tariffs will loom large over the earnings conference call that is kicked off this morning at 8 a.m.
"We're monitoring the tariff discussions and are hopeful that an agreement can be reached," CEO Doug McMillon said in prepared remarks. "Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind. Our merchant teams have been focused on this for months and continue to execute appropriate mitigation strategies."
More details are expected to come on the earnings call which is underway here.