Wal-Mart profit, revenue beat expectations; US sales up more than expected – CNBC

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U.S. same-store sales were up 1 percent in the quarter, topping estimates of only a 0.5 percent increase.

The company also issued second-quarter guidance for earnings per share of 95 cents to $1.08, versus estimates of 98 cents a share.

CFO Brett Biggs told CNBC that Wal-Mart accelerated the next round of price cuts. “The strong Q1 performance allowed us to do that.”

Horvers, on CNBC’s “Squawk Box,” said Wal-Mart had been holding back on prices cuts “because of the wage investments and the investments they made in e-commerce to catch up to Amazon or at least try to catch up with Amazon.”

As a result, Wal-Mart rivals should watch out, Horvers added. “You’re going to be worried about grocery stores. Wal-Mart is a quarter of all grocery dollars in the U.S. You’re going to worry about dollar stores. You’re going to worry about Target.”

Budd Bugatch, retail analyst at Raymond James & Associates, also pointed out the importance of grocery sales to Wal-Mart. “What it does for them is it also improves traffic in the stores.”

“Traffic has not been up year over year in the comp traffic for six consecutive quarters,” he added in a separate “Squawk Box” interview.

But other major retailers, excluding Home Depot and Lowe’s, have been reporting dismal quarterly results.

Case in point, Target on Wednesday reported a lower-than-expected increase in sales at established stores as consumers spent more on big-ticket purchases like homes and cars than on discretionary items like apparel.

Quarterly revenue at Target was short of estimates, though earnings did beat expectations.

“Several things [are] working for the consumer: fuel prices, unemployment and interest rates still low. But there is an air of uncertainty that is likely keeping the consumer from being as bullish as they would like to be,” Wal-Mart’s Biggs said.

“E-commerce growth of 7 percent in constant currency isn’t the growth rate we would like in that side of the business, but we continue to make foundational progress.”

“They have about 10 million SKUs online,” Bugatch said. “But that hasn’t grown fastest enough for them. Even though the U.S. has grown better than the overall global e-commerce area, e-commerce is an area for focus for them.”

While Wal-Mart stock was up about 3 percent year to date, as of Wednesday’s close, it has struggled in the past 12 months, falling about 20 percent.

WMT in past yearSource: FactSet

On Monday, Wal-Mart announced it had signed an expanded sourcing deal with McKesson, which will help lower costs as the retailing giant and U.S. drug distributor expand an alliance for jointly procuring generic medicines.

The deal is aimed at “using our combined size and scale to drive efficiencies,” George Riedl, senior vice president and president of the health and wellness division at Wal-Mart in the U.S., said in a statement.

Wal-Mart also made headlines earlier this month when it said it was suing Visa for allegedly forcing the retailer to let customers use signatures when paying with their chip-based debit cards.

“PIN is the only truly secure form of cardholder verification in the marketplace today, and it offers superior security to our customers,” Wal-Mart said in a Tuesday statement.

— CNBC’s Christine Wang, Matthew J. Belvedere, and Courtney Reagan, as well as Reuters contributed to this report.

Wal-Mart profit, revenue beat expectations; US sales up more than expected – CNBC