(Reuters) -Walmart raised its full-year forecast and reported better-than-expected first-quarter results on Thursday, betting that easing inflation will drive stronger sales of groceries and non-essential merchandise like clothingand electronics.
Shares of the Bentonville, Arkansas-based company were up 6%in premarket trading. If these gains hold, the stock will hit a record high on Thursday. The strong performance by the nation’s largest retailer could assuage some investors’ fears about ebbing U.S. consumer spending.
The company reported total U.S. comparable sales up 3.9%, excluding fuel, for its first quarter ended April 30. Average transactions – a proxy for online and store traffic – also rose by a similar amount while shoppers also put in more items in their carts, Walmart said on Thursday. Analysts expected those sales to rise 3.15%, according to LSEG.
Online sales also surged 22%, surpassing the 17% growth it posted during the typically robust holiday season. Growth was driven by its pickup & delivery services and increased sales through its third-party marketplace.
During the pandemic, Walmart heavily invested in online operations by expanding its range of sellers and products while introducing Walmart Plus — a $98 per year subscription offering expedited deliveries. These moves have appealed to households earning more than $100,000 per year, who have become a driving force for its online operations.
“It was nice to see that sales increased because of volumes and not just prices. The dispiriting aspect is that wealthier consumers are continuing to do the heavy lifting,” said Brian Jacobsen, chief economist at Annex Wealth Management, which holds Walmart in mutual funds and ETFs it manages.
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