Shares of retail giant Walmart got a 3 percent boost yesterday following the release of Q1 earnings that beat the Street. But the real beat for the largely brick-and-mortar retailer lay in how it has managed not just weather the eCommerce storm, but how it has thrived under these digital conditions.
Here’s what we mean.
For the quarter, Walmart posted a beat in earnings per share at $1.00, above analyst expectations for EPS by four cents. Revenue, however, missed the mark by a smidge, coming in at $117.54 billion in Q1 — below the expected $117.74 billion. Still, this is indicative of growth, with revenue up 1.4 percent despite the miss.
Same-store sales at U.S. locations saw 1.4 percent growth for the quarter. And, in contrast to many others in the legacy retail space, Walmart reported comparable sales traffic was up 3 percent on a two-year stacked basis.
The company looks ahead to comp sales growth of 1.5 percent to 2.5 percent in Q2. Here, it looks like the company’s aggressive pricing strategy has helped Walmart continue to bring more shoppers into physical stores.
But it’s in the realm of eCommerce where Walmart showcased its largest development.
Its efforts to expand its digital business are paying off. The retailer saw eCommerce sales jump 63 percent in Q1, a major rise over even the 29 percent growth shown in the prior quarter. Likewise, Walmart’s online gross merchandise volume rose 69 percent in Q1.
The company noted that a majority of eCommerce sales were organic, coming through Walmart.com as opposed to the sites of its series of recent digital acquisitions.
“Inside the company, we can see that we’re moving faster to combine our digital and physical assets to make shopping easier and more enjoyable for customers, but we can also see plenty of room to improve,” said Walmart CEO Doug McMillon during Thursday’s earnings call.
This will continue to be the company’s main area of focus moving forward.
“We need to scale our eCommerce business further and see some additional strength in our store comps to deliver the results we know we’re capable of,” McMillion said.
Walmart has been embroiled in a battle for market share against the likes of Target and online retail giant Amazon. Walmart and Amazon especially have a highly competitive retail relationship (which some might even call adversarial).
In January, Walmart rolled out a fee-based, two-day shipping offering, dropping the free shipping threshold from $50 to $35. This prompted Amazon to drop its own threshold for free shipping.