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Wal-Mart sales up, guidance up, shares up

Wal-Mart Stores (WMT) announced Q2 financial results that were a bit better than expected.

The retail behemoth reported earnings of $1.07, beating expectations for $1.02 per share. Revenue came in at $120.9 billion, which was better than the $120.1 billion expected.

Comparable US store sales increased by 1.6% reflecting the eighth straight quarter of gains. Management noted that comparable store traffic grew for the seventh straight quarter.

“We’re pleased with the positive momentum in our business,” CEO Doug McMillon said.

Wal-Mart’s closely watched e-commerce sales grew by 11.8%, driven by a 13.0% jump in gross merchandise volume.

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“This was primarily due to growth in our marketplace offering in the U.S., the continued roll out of online grocery and growth of pick-up in stores and clubs,” McMillon said. “We continue to see proof that our customers enjoy a seamless shopping experience. The distinctions that we talk about today between stores, apps, pick-up, delivery and sites are continuing to blur into the background for customers.”

Management now expects the company to earn $4.15 to $4.35 per share for the full year. This is up from prior guidance of $4.00 to $4.30.

Wal-Mart shares are up 4% in pre-market trading.

Difficult retail environment

In recent years, the retail story has been all about the consumer shift from brick-and-mortar to online, where goods and services can be obtain more cheaply and conveniently. The title of 800-lb gorilla in retail went from Wal-Mart to Amazon.com (AMZN).

On Wednesday, Target management addressed this euphemistically by saying they are “addressing the challenges we are facing in a difficult retail environment.”

Wal-Mart, whose e-commerce has been lackluster, made waves earlier this month when it announced it would acquire online retailer Jet.com for $3 billion.

Jet.com's offices
Jet.com’s offices

“Walmart’s advantage has always been in providing the lowest prices on a basket, and Jet has created a unique way to deliver the lowest cost basket online,” McMillon said on Thursday.

“We believe the broadline retailers have higher vulnerability to online competition, but view Walmart’s acquisition of Jet.com as a positive development in the company’s ecommerce strategy,” Nomura analyst Jessica Schoen Mace said.

Wal-Mart’s acquisition of Jet.com is expected to close by the end of this year.


Sam Ro is managing editor at Yahoo Finance.
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