• by Sarah Mahoney , Yesterday

Both Walmart and Target reported strong sales gains for the quarter. But experts are reading the results from the two companies through vastly different lenses.

At Target, it looks like the Minneapolis-based retailer's long winter of underperformance may be ending.

And at Walmart, there are signs that American consumers -- already stretched thin -- are suffering at the gas pump. When the company did not increase its full-year forecast, skittish investors sent the stock down by as much as 7%.

And after years of disappointments, Target finally posted numbers worth bragging about. Sales in the first quarter grew by 6.7% to $25.4 billion, with gains occurring in all six core categories.

In even more encouraging news, the retailer seems to think those gains will continue, raising its forecast for the year to sales gain of 4%, up two percentage points from previous predictions. It also anticipates gains for each individual quarter.

"While we're pleased with our first quarter performance, our focus remains on building consistent, long-term growth, and we recognize there is much more work in front of us," said Target CEO Michael Fiddelke in the announcement. "We're focused on staying disciplined and flexible in an uncertain operating environment and continuing to invest boldly in our team, capabilities, and an elevated guest experience to unlock our full potential over time."

In addition to increased traffic, there are other signals that Target is poised for a comeback. Women's Wear Daily reports that designer Isaac Mizrahi, who was behind one of the retailer's biggest collabs ever, may be returning to the brand as the company looks to regain some of its former style glory.

But the old problems haven't gone away. A coalition of activist shareholders are unhappy that Brian Cornell, former CEO, has been anointed as head of the board, and that the company is also asking shareholders to approve director Christine Leahy again. Those elections are scheduled for next month.

The group holds Cornell accountable for the company's weak performance over the last five years, and says that the appointment of Fiddelke, a successor chosen by Cornell, "suggests continuity without correction."

In a letter addressed to Target shareholders, it said that the recent CEO succession "does not signal that the Board is focused on the genuine reset we believe is critical to turn the Company around." Not only will retaining Cornell be expensive, it said, "but his role undermines the turnaround effort by jeopardizing the independence and effectiveness of both management and the board."

Although it was the company's best quarterly results in four years, analysts remain somewhat skeptical.

"Early reads on strategic initiatives are positive, particularly around assortment refinement and in-store experience enhancements," writes Krisztina Katai, an analyst who follows the company for Deutsche Bank. "However, we would highlight that the bulk of Target's transformation remains ahead, with several large-scale initiatives still in early innings."

Those include a broad-based center-store food reset; a multiyear re-merchandising effort in home; and the rollout of Target Beauty Studio starting in late August.

Katai is rating the stock a "hold" until there is more "durable evidence" that the momentum can continue.

Brett Husslein, an analyst tracking Target for Morningstar, agrees. "We believe the recovery remains execution-dependent as the firm navigates an intensely competitive retail landscape and a consumer base stretched by macroeconomic pressures," he writes.

At Walmart, revenue rose 7.3% to $177.8 billion, while global ecommerce sales surged 26%. Operating income increased to $7.5 billion, a 5% gain.

Not only did the company report broad-based share gains, but it also noted a 44% increase in retail advertising through its Walmart Connect platform, and a 36% rise in global ad revenue.

Membership fees grew by double digits. For the coming quarter, it forecasts an increase of 4% to 5%.

And while the company met all expectations, it sees warning signs ahead and notes that rising gasoline and energy prices may drag on its operating costs, eventually resulting in higher prices.

For the first time in four years, consumers bought an average of less than 10 gallons of gasoline per trip, an indication that people can't quite afford to fill their tanks, reports the Wall Street Journal.

"The headline consumer is reasonably healthy, but when you look underneath, the pressure is uneven," CFO John David Rainey told WSJ, with low-income shoppers showing more budget-conscious behavior.

In its earnings call, the company said it has already absorbed $175 million in higher-than-planned fuel costs and that, if gas prices remain at these levels, it expects to raise retail prices in the second half.