Walmart shares rise. Earnings stood out during a tough spring for retail.

Walmart reported first-quarter adjusted earnings and revenue that beat Wall Street expectations, raising its outlook for the fiscal year — a notable comparison to other retailers that reported results this week, especially those that don’t focus as much on essentials.

Walmart (ticker: WMT ) reported adjusted earnings of $1.47 per share on revenue of $152.3 billion. Analysts polled by FactSet had expected adjusted profit of $1.32 a share on revenue of $148.9 billion.

U.S. same-store sales rose 7.4%, beating analysts’ estimates of 5.5%.

“We had a strong quarter. E-commerce was up 26% and worldwide computer sales were strong,” Chief Executive Officer Doug McMillan said in the earnings release. “We used spending, expanded our operating range, and grew profits over sales.”

The retailer also raised financial forecasts for fiscal 2024. The company now expects adjusted earnings of $6.10 to $6.20 per share, while analysts surveyed by FactSet were expecting $6.14. Revenue for this year is expected to increase by 3.5%.

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Guidance for the current quarter was below consensus. Walmart expects second-quarter earnings of $1.63 versus $1.68 per share. Analysts polled by FactSet had expected earnings of $1.71.

By afternoon, the stock was up 0.6% at $150.56, though it had risen to $154.29 in morning trading.

The positive reaction is not surprising. Other stores offered a mixed picture of consumer demand, while Walmart’s report and full-year outlook were unquestionably strong, punching through the high expectations Wall Street had before the numbers came down.

Before Walmart’s results, the retail earnings season was off to a muted start. Target ( TGT ) delivered better-than-expected earnings, though the big-box company sounded a note of caution with its financial forecasts. and discount retailer TJX

Cos. ( TJX ) also lowered its second-quarter forecast. Both stocks zigzagged in response to the results.

Target and TJX’s focus is more on discretionary products like clothing, a category where inflation is pushing shoppers to spend more on essentials like food. Home Depot ( HD ) also noted weakness in discretionary sales when it reported results on Tuesday.

Conversely, Walmart excels at selling essentials, which has earned its reputation as a highly defensive retail investment. That seems to be working now, as consumers still focus on value, as people continue to want to spend on experiences like travel that were put on hold during the high cost of living and during the pandemic.

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That is, the company is not immune to changing costing methods. Last year, the administration was forced to sharply cut its guidance as shoppers quickly cut back on purchases of favorite products such as apparel and home goods.

Walmart sounded the alarm again in February. The company issued a weak forecast that overshadowed strong results, warning that its shoppers were feeling the pinch. In contrast, Thursday’s report was strong, leading the company to raise its outlook to the relief of investors.

Walmart’s results demonstrate that it sees some of the broader trends affecting the industry. While grocery sales were strong, same-store sales rose, discretionary categories such as apparel and home goods underperformed.

The company’s larger grocery business comes with slimmer margins—gross margin fell in the quarter—and somewhat relaxed food prices could act as a slight upside later this year. On its conference call, management said it was working with suppliers to lower food prices sooner, “to free up money for customers to use on the items they prefer…it will take longer than we would like in those categories.”

“Walmart’s first-quarter performance suggests the company is confident in its momentum and forward guidance is probably conservative,” wrote Wells Fargo analyst Edward Kelly. “The list of high-end names where we can realistically expect any revenue this year is short, but Walmart makes the cut.”

Indeed, management noted that Walmart’s grocery business is attracting new customers, including valuable younger and higher-income consumers. Users of its Walmart+ subscription services also tend to spend more than regular shoppers, it noted.

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The company’s e-commerce business grew 26% in the quarter, while its global advertising business rose 30%, demonstrating the company’s continued evolution from its core retail business toward faster-growing, more profitable segments.

“Walmart has undergone a remarkable transformation, moving beyond its roots as a traditional retailer to dramatically evolve into a diversified home services company,” wrote Third Bridge analyst Nicholas Calle.

Internationally, the film fared well too, with double-digit sales growth in key markets like China and Mexico and India’s Flipkart.

“This year is off to a good start and the market seems to agree,” said chief financial officer John David Rainey.

Write to Teresa Rivas at [email protected] and Angela Palumbo at [email protected]

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