Dive Brief:

• Walmart's second quarter revenue grew 1.8% year over year to $130.4 billion as the retailer's U.S. comparable sales rose 2.8% and domestic e-commerce sales grew 37%, according to a press release.
• The retail giant's operating income declined 2.9% in Q2 to $5.6 billion, a figure dragged down by its Flipkart business in India. (Walmart's U.S. operating income increased 4%.) Net income in Q2 was nearly $3.7 billion, a lofty improvement over the $727 million loss Walmart logged in Q2 last year.
• Walmart's stock jumped 5% Thursday as the company raised its guidance on profit metrics slightly for the fiscal year as its total comps and Sam's Club comps (1.2%) beat analyst expectations, according to Seeking Alpha.

Dive Insight:

Another quarter, and more vindication for Walmart's investments into its omnichannel capabilities and digital sales. 

Like other recent earnings reports, Walmart noted grocery is driving its e-commerce growth. During this most recent quarter, the retailer expanded grocery pickup to 2,700 stores and delivery to 1,100 locations. 

"As we scaled grocery pickup in the U.S., it unlocked new capabilities like grocery delivery," said McMillon in a statement. Walmart is the leader in grocery pickup with more than 3,000 stores set to offer the service by the end of the year. To boost delivery usage and compete with Amazon, in June Walmart began testing an unlimited grocery delivery program for $98 a year. 

In addition, the retailer brought in a veteran of Amazon and Microsoft as its new chief technology officer and added a new employee-assistance app for Sam's Club associates.

"Customers are responding to the improvements we're making, the productivity loop is working, and we're gaining market share," said McMillon.  

Analysts recognized the momentum in Walmart's performance. Moody's Vice President Charlie O'Shea said in emailed comments that "Walmart continues to steam ahead," racking up returns on past investments, "a trend which we expect to continue for the foreseeable future."

O'Shea added that with Walmart's raised guidance and a domestic retail landscape "continuing to favor size and strength," his team expects the retailer "to continue to be one of the pacesetters in retail, with continued share growth benefitting from its next day delivery effort, which is rolling out at a breakneck pace, now covering 75% of U.S. households."  

Neil Saunders, managing director of GlobalData Retail, noted that growth in Walmart's comps slowed compared to last year, but that growth (2.8%) still represented "a respectable outcome" won against a tough comparison against last year. "In our view, it remains the case that performance remains largely the responsibility of the strategies of individual retailers and cannot be blamed on external circumstances," Saunders added. 

Saunders said his firm's data showed Walmart's e-commerce efforts had cannibalized some of its in-store customers, but he added that "this is a necessary evil; in our view, it is better that Walmart retains that spend than allowing it to migrate to Amazon."

More good news for the retailer from GlobalData Retail: Walmart's store refreshes are likely having "positive impact on customer perceptions and is helping to ease up basket sizes," while the expansion of dollar stores "does not seem to be affecting Walmart in the way it did a few years ago." (Saunders credits Walmart's price investments for the latter.)

All of this is being done as Walmart's bottom line improves on the whole. Saunders noted that "the scale of Walmart's operating profit show that this is a company that can easily afford the investments it is making in e-commerce and elsewhere and that it has plenty of firepower for any battles that may lie ahead."

Looming over Walmart's results was the recent shooting at an El Paso, Texas store that killed 22 as well as one in Southaven, Mississippi that killed two workers. CEO Doug McMillon began his comments Thursday morning with an acknowledgment of the incidents and a nod to calls for the company to strengthen store security and revise its approach to firearms sales.

“We will strive to use these experiences to identify additional actions we can take to strengthen our processes, improve our technology and create an even safer environment in our stores,” he said.