Wal-Mart Stores today reported higher-than-expected quarterly sales at established US stores.
A huge investment to bring more customers into the discount retailer paid off while a bigger push into e-commerce boosted online purchases, sending its shares to a 52-week high.
Wal-Mart and analysts said the company is benefiting from a $2.7 billion investment to increase entry-level wages and enhance the training of its workforce, which has led to better stocked shelves and cleaner stores.
It said store visits rose 1.5%, the tenth consecutive quarterly increase.
Wal-Mart's performance, along with rival Target Corp's results this week, bucked a string of weak results by department store retailers like Macy's.
Target yesterday reported higher-than-expected quarterly earnings and sales, and set an optimistic tone for the year.
Wal-Mart said sales at US stores open at least a year rose 1.4%, excluding fuel price fluctuations, and was the 11th consecutive quarterly increase. Analysts were expecting a 1.3% increase.
Wal-Mart has been aggressively investing in making its prices more competitive compared to rivals.
It is carrying out price tests in 11 states and has asked vendors to offer grocery prices that are 15% lower than competitors.
Wal-Mart's US chief executive Greg Foran said comparable sales in food and grocery improved during the quarter, without sharing details. Grocery accounts for nearly 53% of overall revenue for the retailer.
The company said its online sales rose 63% in the first quarter, which was higher than 29% growth in the fourth quarter.
The company said most of the growth was from its existing online operations rather than from acquisitions. Online sales added 0.8 percentage points to the first quarter comparable sales gain.
Wal-Mart has been trying to catch up to online rival Amazon.com and in October, the company said it would slow the pace of new store openings to focus on expanding its e-commerce business.
To accelerate its e-commerce business, Wal-Mart has been acquiring small online retail startups.
It has acquired three companies so far this year and is currently in talks with small online clothing retailer Bonobos.
The company said today that earnings per share was $1 for the quarter ended on April 30, exceeding the analysts' average estimate of 96 cents, according to Thomson Reuters.
Consolidated net income fell to $3.04 billion from $3.08 billion due to a higher tax rate.
Quarterly revenue rose 1.4% to $117.5 billion, slightly lower than analysts expectations of $117.7 billion due to a stronger dollar, which reduces the value of overseas sales. Revenue grew 2.8% on a currency neutral basis.
For the second quarter, Wal-Mart said it expected an increase of 1.5-2% in US same-store sales. It forecast earnings per share of $1 to $1.08, against market expectations of $1.07.
