Shares of Wal-Mart Stores Inc. rallied strongly in premarket trading Thursday after the big retailer reported a higher-than-expected quarterly profit as sales in the U.S. market rose and U.S. company kept a lid on costs.
Shares of the retailer, a component of the Dow Jones Industrial Average, were lately up 9 percent at $69, having closed the prior session 3 percent lower at $63.
Excluding special items, Wal-Mart said its earnings per share came to 98 cents in its fiscal fourth quarter, which ended April 29, exceeding the analysts’ average estimate of 88 cents, according to Thomson Reuters I/B/E/S.
Wal-Mart said sales at U.S. stores open at least a year rose 1 percent, excluding the impact of fuel prices. That is stronger than market expectations for a rise of 0.5 percent, according to Consensus Metrix.
Wal-Mart represents about 10 percent of total U.S. retail sales.
The company's performance bucked a string of weak results by competitors. On Wednesday, rival retail chain Target Corp. gave a cautious outlook after reporting a lower-than-expected increase in quarterly sales due to unseasonable weather and weaker demand for electronics and groceries.
Shares of the company fell as much as 11 percent, their biggest intraday decline since December 2008, as investors focused on weaker revenues and a poor outlook despite higher-than-expected earnings.
Target's woes also encouraged investors to sell shares of rival retailers like Macy's,JC Penney and Wal-Mart on Wednesday.
Target was the latest traditional brick-and-mortar chain to report disappointing sales as traditional chain stores spend more at online merchants like Amazon.com Inc. and as slowly rising wages enable consumers to spend more on big-ticket purchases like cars and home improvements.
"We're approaching our business with appropriate caution as sales trends at Target and many of our key competitors (have) weakened," Chief Executive Officer Brian Cornell said on a conference call.
Data from Reuters were used to report this story.