By Joshua Jamerson 

Wal-Mart Stores Inc. on Thursday posted surprise revenue growth in the first quarter and offered an upbeat view on the current period, underscoring that the company's robust grocery business could help shield it from a difficult retail environment.

Shares of Wal-Mart jumped 8.2% to $68.32 in premarket trading and have risen 3% this year as of Wednesday's close.

The Bentonville, Ark., company has been spending heavily to get customers back into its stores. It has worked to better stock stores, improve efficiency and increase pay for its employees. But Wal-Mart has warned that those efforts would dent profits this fiscal year. Indeed, profit slipped 7.8% in the first quarter, but it still topped the company's expectations.

Wal-Mart's results stand out from a list of retailers with disappointing starts to the year. On Wednesday, Target Corp. reported that consumers pulled back on spending, with its chief executive citing "an increasingly volatile consumer environment." Soft results from department stores like Macy's Inc. and Nordstrom Inc. illustrated shoppers' shift away from brick-and-mortar stores and sparked declines across the retail sector.

Wal-Mart gets more than half its revenue from grocery products, which some analysts have said could shield it from some of the pressures on brick-and-mortar retailers, as food shopping has been slower to shift online.

Retailers have been closing weaker locations and investing in e-commerce as consumers shift online shopping and fast-fashion chains. But the moves haven't been enough to counter weak demand.

Still, off-price chain TJX Cos. and home-improvement stores like Home Depot Inc. this reported healthy traffic and spending at their locations, suggesting that consumers are willing to spend but are being more selective about where.

In the first quarter, sales at Wal-Mart's existing U.S. stores ticked up 1%, marking the seventh straight quarterly gain after a long stretch of declines. Analysts polled by Consensus Metrix expected 0.5% growth in the metric.

The number of people visiting Wal-Mart's stores rose 1.5%.

Over all, Wal-Mart posted a first-quarter profit of $3.08 billion, or 98 cents a share, down from $3.34 billion, or $1.03 a share, a year earlier. Wal-Mart had forecast earnings of 80 cents to 95 cents a share. Analysts anticipated 88 cents.

Revenue rose 0.9% to $115.9 billion, above the $113.2 billion analysts polled by Thomson Reuters had forecast. Excluding currency impacts, revenue rose 4%.

For the second-quarter, company said it expects earnings between 95 cents and $1.08 a share. Analysts were expecting second-quarter profit of 98 cents.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

 

(END) Dow Jones Newswires

May 19, 2016 07:41 ET (11:41 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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