Walmart reports best sales growth in a decade, shares spike

Walmart (WMT) had a blowout quarter and shares are surging.

U.S. second-quarter comparable store sales, excluding gas, were up 4.5% in the quarter, surpassing analysts’ estimates of 2.2% growth.

“The Walmart U.S. business delivered the best quarterly comp sales results in more than a decade,” CEO Doug McMillon said in a statement.

A Walmart worker organizes products at a Walmart store in Teterboro, New Jersey, U.S., October 26, 2016. REUTERS/Eduardo Munoz

The retailing giant reported adjusted earnings of $1.29 per share, beating Wall Street expectations of $1.22. Management raised its full-year EPS guidance (excluding Flipkart results) to a range of $4.90 to $5.05 per share, up from previous guidance of $4.75 to $5.00.

Shares were up more than 10% in early trading.

E-commerce and groceries gain steam

E-commerce was a bright spot for Walmart, with sales growing more than 40% in the quarter.

“We feel good about the direction of the business and remain confident in our ability to grow sales by about 40% for the full year,” CFO Brett Biggs said.

Earlier this year, Walmart, which sees most of its sales coming from groceries and other household staples, rolled out a cleaner and sleeker Walmart.com. The retailer is now offering “premium” brands through Lord & Taylor and new features such as 3D shopping for home furnishings allowing customers to “buy the room.” More than 1,100 new brands have been added to Walmart.com this year, which has been “a key area of focus” for the company.

“We have more work to do on our eCommerce assortment to get to the margin levels we desire and we’re in discussions to bring more key brands to our site,” McMillon said.

Omni-channel was another key area for the retailer, particularly its online grocery pickup. The service is now available at more than 1,800 stores and is expected to reach 40% of the U.S. population by the end of the year.

Grocery continues to be strong for Walmart too. During the quarter, strong fresh food sales led to the best grocery comp sales in 9 years.

Sales were strong among all merchandise categories.

Walmart had a blowout second quarter.

On tariffs

Like most large multi-national corporations, Walmart management addressed the issue of tariffs.

Here’s what CFO Brett Biggs said (emphasis ours): “While we know questions persist about tariffs, the potential future impact is difficult to quantify. We are closely monitoring the tariff discussions and are actively working on mitigation strategies, particularly in light of potentially escalating duties. It’s important to remember that in all of our markets where we have stores and eCommerce operations, the majority of our merchandise is purchased locally in that country. In fact, we buy more merchandise, by a wide margin, in the U.S. than from any other country. We’ll do our best to update you on anything important related to tariffs in the quarters to come and continue to act on behalf of our customers and provide them with value on everything we sell.”

You can read Walmart’s full press release on Yahoo Finance.

Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to laroche@oath.com.