• by Sarah Mahoney  @mahoney_sarah, May 17, 2024

Walmart, which has been busy laying off corporate employees and shuttering its healthcare centers, has also been busy making plenty of money. The Bentonville, Arkansas-based retailer released quarterly results showing impressive sales and profit growth, including market share gains among higher-income consumers.

It also benefit8ed from fast-growing ad sales in its Walmart Connect retail media network, gaining 24% overall and 26% in the U.S., and raised its financial forecast.

Revenues climbed 6% to $161.5 billion, up from $152.3 billion in the first quarter of 2023. Operating income advanced 8% to $6.84 billion, compared with $6.24 billion a year ago.

Comparable sales rose 3.8% in Walmart’s U.S. operations, and the company now expects sales to grow by 3.5% to 4.5% in the coming quarter, better than earlier predictions.

Consumers in the U.S. shopped more, and upper-income shoppers looking for better value helped it gain market share. Ecommerce sales jumped 22%.

In a conference call webcast for investors, Doug McMillon, president and chief executive officer, commented more fully on the company’s recent surprise decision to pull the plug on its five-year-old healthcare clinics.

“There were a number of aspects that were going well, and we really want to be part of the solution to improving healthcare in this country,” he said.  “But the reality is that given reimbursement rates and cost to serve, we could no longer see a path to achieving an acceptable level of profitability, and we're committed to being disciplined with our investments.”

Walmart’s financial results are better than analysts expected. Noah Rohr, an analyst who follows the company for Morningstar, calls the numbers impressive, noting strength in grocery sales, up in the mid-single digits, and health and wellness, climbing in the high single digits. “That helped offset weakness in general merchandise sales,” he writes. “We think the retailer is well positioned to continue taking market share across various income cohorts.”

Rohr also called out improvements at Sam’s Club, with sales climbing 4.6% to $21.4 billion, on top of 7% growth last year. “The warehouse club saw a 13% uptick in membership income, and we were encouraged by continued growth in Sam’s Club Plus membership penetration,” now at a new high of 54%. That exceeds Costco’s executive membership penetration, which is in the mid-40 percent range.

Krisztina Katai, an analyst who follows Walmart for Deutsche Bank, is even more enthusiastic and continued to rate the retailer as a “buy.”

“The debate coming into the quarter was whether Walmart saw decelerating sales trends amid a choppy and weakening consumer backdrop,” she writes. Not only did Walmart refute this, she adds, but the continued strength into May reinforces the many ways Walmart is “evolving from a dominant retailer to a more versatile and tech-driven player, enabled by a strategic push into areas like digital advertising, marketplace, fulfillment, and data analytics.”