WMT Walmart Inc

By Sarah Nassauer 

Walmart Inc. said its sales rose during the first quarter, adding to over four years of sales increases as the retail behemoth grabs market share from struggling competitors and grows online.

Sales at U.S. stores and websites operating at least 12 months grew 3.4% during the quarter ended April 26, boosted by online sales, including grocery, and a strong Easter buying season, the company said Thursday.

In the U.S., sales grew steadily throughout the quarter, the company said, even as retail sales data released earlier in the week showed a slight slowdown in spending in April. Meanwhile, Macy's this week reported slightly better-than-expected comparable sales in the latest quarter, up 0.6%.

Walmart stocked more goods during the quarter than the same period last year. Inventories were up about 5.9% as the retailer accelerated buying in some categories and bulked up product quantities in its e-commerce fulfillment centers as it works to deliver online orders more quickly.

Walmart faces higher potential product prices after the Trump administration last week increased tariffs on about $200 billion of goods imported from China to 25% from 10% and threatened a further set of tariffs on all Chinese imports.

The company's shares rose 2.2% in premarket trading Thursday.

"We feel good about the quality of the inventory position and expect quantities to normalize as the year progresses," said Brett Biggs, Walmart's chief financial officer, in a news release.

Walmart is the largest importer in the country, according to the Journal of Commerce. But around 56% of its U.S. sales are from groceries, which are less likely to come from China than other products such as Christmas lights or apparel. Around two-thirds of Walmart's purchases are made in the U.S., company executives have told investors.

"We're monitoring the tariff discussions and are hopeful that an agreement can be reached," said Mr. Biggs. Walmart's merchant teams have been focused on mitigating price increases for months, he said. "Our goal is to always be the low-price leader, and we will actively manage pricing and margins."

While some retailers have closed or seen sales sputter in recent years with the rise of online shopping, quarterly comparable sales have risen consistently in Walmart's primary U.S. business for over four years.

Walmart has shifted strategies, significantly reducing spending on building new stores in favor of growing online, lowering prices and adding more services in physical stores like online grocery pickup. Last week Walmart said it has invested in its online delivery network over the past two years to speed delivery times.

Profits have come under pressure as more revenue comes from lower-margin online sales and online investments continue. Walmart's operating income in the quarter fell 4.1% to $4.9 billion, in part because its purchase of Indian e-commerce startup Flipkart last year is weighing on profits as expected.

In the U.S., the largest piece of Walmart's business, operating income grew 5.5%, as some transportation costs subsided and online sales margins improved, countered by continued efforts to lower prices.

E-commerce sales continued to rise, boosted by a rapid expansion on online grocery offerings, up 37% in the U.S. during the quarter. Walmart has said it expects U.S. e-commerce sales to grow 35% for the full fiscal year.

Total company revenue rose 1% to $123.9 billion from $122.7 billion during the same period last year.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

May 16, 2019 08:35 ET (12:35 GMT)

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