Walmart Trounced Earnings Expectations. What’s Behind Its Big Beat.

Walmart stock is rising Tuesday following the retailer’s better-than-expected fiscal first-quarter earnings.

Walmart said it earned $1.18 a share, on revenue of $134.62 billion. Analysts were expecting earnings per share of $1.09 on revenue of $130.91 billion.

Comparable sales in the U.S. rose 10%, led by food, consumables, and health and wellness—not surprising, given the pandemic. E-commerce sales soared 74%.

However, given the uncertainty related to Covid-19, Walmart withdrew its financial guidance for the full fiscal year.

Expectations were high going into the quarter, and it’s not hard to see why: While spiraling unemployment and uncertainty has naturally led fearful consumers to pull back on purchasing, Walmart stands to fare better than most. It’s been able to keep its stores open during the pandemic, it sells essentials, and already had an extensive infrastructure in place for delivery and click-and-collect ordering. Its reputation for low prices is another boost.

In many ways, Walmart is benefiting—as much as a retailer can—from the current environment. Many nonessential retailers have been forced to close, fast and free shipping is now more important than ever, and the company’s head start in logistics and automation has made it less susceptible to sickness in its workforce. The pandemic may also help it gain ground in grocery, where it is long been fighting to take share. The company’s boost in same-store sales and online ordering shows that its gaining traction among consumers, who perhaps are more value-focused than ever, or found their usual stores closed or poorly stocked.

Investors shouldn’t be too concerned about Walmart’s decision to pull financial guidance for the year: Simply too much has changed since the company issued it in February, and even as many states forge ahead with reopening, questions remain about what might happen in the fall, when the health care system has to contend with Covid-19 and the flu.

Walmart is up 3.4% to $132.05 in recent trading.