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story.lead_photo.caption This undated file photo shows Wal-Mart's sign in front of its Bentonville headquarters.

Walmart Inc.'s U.S. stores open at least a year saw the strongest first quarter in nine years, with sales up 3.4%, the retailer said Thursday.

Reporting before the stock market opened, Walmart posted net income of $3.84 billion, or $1.33 per share, for the quarter that ended April 26. That's up 80% from $2.13 billion, or 72 cents per share, for the same quarter a year ago.

Per-share earnings were $1.13 after adjusting for nonrecurring expenses, but the Bentonville retailer still topped the average earnings estimate of $1.02 per share from 28 analysts surveyed by Thomson Reuters.

Revenue grew 1% to $123.9 billion, including membership fees and other income.

Walmart's U.S. division, the company's largest, reported net sales of $80.34 billion, up 3.3% from last year's first quarter. E-commerce sales, which are reported as part of the U.S. division, grew 37%, boosted largely by online grocery as well as the home and fashion categories.

Same-store sales, considered a key indicator of a retailer's health, benefited from a 1.1% increase in traffic. Walmart said in a news release it has redefined traffic to include online transactions as well as in-store purchases.

Greg Foran, chief executive officer of Walmart U.S., said in a conference call with reporters that Walmart now has about 2,450 stores in the U.S. that offer in-store pickup of online grocery orders, and same-day grocery delivery is available in nearly 1,000 locations.

Walmart also announced this week that it now offers next-day delivery on orders of its most popular items to customers in Phoenix and Las Vegas. The service will ultimately cover about 75% of the U.S. by the end of the year.

Brian Yarbrough, a retail analyst with Edward Jones, said the growth in e-commerce and same-store sales contributed to an overall solid quarter. Growth in the mid-single digits in the grocery sector is an especially positive sign, he said.

"For many years, Walmart lost market share in grocery," Yarbrough said. "And for the last probably 12 to 18 months, they've really turned that around and started gaining share back."

The retailer's gains in sales of its private-label goods is especially beneficial for Walmart because those products have higher profit margins than branded items, he said.

"If you are hooked on their private label, you can't find [those products] at Amazon or Target or anywhere else," Yarbrough said. "So a strong private-label program can help drive regular traffic."

Net sales for Walmart International fell 4.9%, to $28.76 billion. However, after adjusting for currency exchange rate fluctuations, net sales increased 1.2% to $30.61 billion.

At Sam's Club, Walmart's warehouse club division, net sales including fuel rose 1.5% to $13.83 billion. Same-store sales excluding fuel grew only 0.3%, partly because of a drop in sales of tobacco products. Traffic at these stores grew 4.7%, slightly offsetting a 4.4% decrease in the average ticket at checkout.

Brett Biggs, the retailer's chief financial officer, said Walmart returned $3.7 billion to shareholders during the quarter through dividends and share repurchases. Most of that is attributed to Walmart's repurchase of about 22 million shares in the quarter.

Walmart warned Thursday that higher tariffs on imports from China will mean higher prices.

In the conference call, Biggs acknowledged that "tariffs tend to lead to increased prices," indicating shoppers may be paying more for items as a result of the administration's trade war with China. However, he said that Walmart will do all it can to balance its increased inventory costs with customers' expectations of low prices.

Yarbrough noted that the stock market's response Thursday was muted because Walmart's stock is "pretty fairly valued. Walmart's shares rose $1.43, or 1.43%, to close at $101.31 on the New York Stock Exchange. Shares have traded between $81.78 and $106.21 in the past year.

Graphs showing Walmart Inc. first quarter information.

A Section on 05/17/2019

Print Headline: Walmart reports best 1Q in 9 years

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