(Bloomberg) -- Walmart Inc. topped Wall Street’s expectations in the fourth quarter as picky shoppers continued buying — bolstering the company’s view of the US economy. 

Sales and profit came in higher than analysts’ average estimates, while executives said the retailer is gaining market share, particularly among households earning more than $100,000 a year. E-commerce sales also rose more than expected, and more shoppers are using same-day and express deliveries. 

Chief Financial Officer John David Rainey said that last year’s fears of a recession proved unfounded. “Fortunately, we avoided that,” he told analysts during the company’s conference call. “And so I think overall, we feel a little better about the health of the economy right now.”  

Walmart shares jumped as much as 6.4% in New York trading on Tuesday, the most in three months. The stock has gained about 12% in 2024, outpacing the advance of the S&P 500 Index. 

Separately, Walmart said it agreed to buy smart-TV maker Vizio Holding Corp. for about $2.3 billion. The deal is expected accelerate the retailer’s advertising business, called Walmart Connect, and help the company and its advertisers to engage more with customers. Walmart has been expanding its nonretail businesses that have faster growth and better margins than the company’s core operations. 

The deal announcement confirmed a Wall Street Journal report from last week. Vizio shares soared as much as 16%. 

Key Numbers

Walmart’s US same-store sales excluding fuel — a key metric for retailers — increased 4% during the quarter through the end of January from the same period a year earlier. Wall Street was expecting 3.1% growth. 

The Bentonville, Arkansas-based company reported adjusted earnings of $1.80 a share, higher than the analyst forecast of $1.65. Adjusted operating income grew about 13%. 

Still, softer guidance for the current fiscal year shows there’s still plenty of concern. Walmart expects consumers to be selective in their spending, and the company has voiced caution in recent months about the effects of persistent inflation and higher interest rates. 

“They are being choiceful,” Rainey said in an interview. Consumers are resilient but looking for value and spending less per trip, he said. However, they’ve been shopping frequently. 

Walmart forecasts sales to grow between 3% and 4% for the current fiscal year — slower than the 5.7% growth the previous period. It sees adjusted earnings of $6.70 to $7.12 a share, with analysts’ consensus estimate at $7.09.

While deflation remains a possibility, Walmart now sees it as less likely based on the latest quarter. Price changes varied among categories, with food prices rising by low-single-digit percentages and general merchandise products, such as toys and apparel, costing less. Sales of general merchandise fell overall, but Walmart gained market share in the category, powered by higher-income consumers.

Growing Volumes

Walmart is selling higher volumes of goods, executives said on the call. The retailer is lowering prices across the store, including for general merchandise and some key grocery products. It’s also reducing inventory to help streamline store operations and increase margins. 

Rainey said Walmart is trimming the losses associated with online orders. The company is increasingly using its stores to fulfill online orders, and last year passed $100 billion in global e-commerce sales for the first time. 

Walmart is likely gaining market share because of its lower prices, store renovations and online presence, according to Truist Securities analyst Scot Ciccarelli. 

US consumers have been buying cheaper products and seeking lower prices while pulling back from discretionary products such as general merchandise. That has resulted in softer sales for some retailers, including Target Corp. and Home Depot Inc. Home Depot shares slipped Tuesday after it reported a fifth straight comparable-sales decline. 

Read More: Walmart Jumps on Better-Than-Expected Year Outlook: Street Wrap

Walmart’s results may bode well for discount retailers, according to Joe Feldman, an analyst at Telsey Advisory Group.

“We are hoping that the consumer will be able to hang in,” he said. A key question will be whether shoppers spend more on general merchandise as food prices moderate, he added. 

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