Bill Simon, Former CEO of Walmart U.S., weighed in on Walmart Inc. ( WMT ) first-quarter results and its stock valuation.

Simon commended the company’s digital sales growth in its recent quarter, despite the economic challenges presented by high gas prices. Speaking on CNBC’S ‘Fast Money' on Thursday, he lauded Walmart’s digital sales, which surpassed total U.S. growth for the first time, while in-store sales remained stagnant or fell. Simon suggested that this shows the upper echelons of the economy continue to shop, despite economic pressures.

Simon also praised Walmart’s strategic shift to NASDAQ, repositioning itself as a tech company. He believes this, along with the company’s investments, has allowed Walmart ( WMT ) to fulfill its tech company narrative. He noted that an increasing share of the company’s digital sales is being made through physical stores, showing the integration of physical and digital retail.

“Hard to imagine that they are getting the beating that they are getting,” said Simon.

However, Simon expressed concerns about Walmart’s current valuation, stating it was “difficult to rationalize.” He added that, given a choice, he would put his money on Target Corporation ( TGT ) instead of Walmart ( WMT ). Simon explained further by saying Walmart ( WMT ) is better as a retailer, it is currently priced for perfection, while Target ( TGT ) has a lot “more upside.”

Simon also hinted at potential investment opportunities in the retail sector, suggesting that many retail names are currently undervalued, indicating a stronger economy than perceived.

Walmart Faces Costs, Inflation Pressure

Walmart’s digital sales growth comes in the wake of the company absorbing a $175 million hit from fuel costs to protect consumers. CFO John David Rainey revealed that the company absorbed these costs to secure long-term share gains, despite short-term profit pressure.

Despite this, Walmart’s adjusted earnings matched analyst estimates, with revenue increasing 7.3% year over year. Walmart's ( WMT ) CFO said the company expects retail price inflation to rise further in the second quarter and later this year if higher costs continue.

Earlier this month, reports suggested that Walmart ( WMT ) plans to cut or relocate about 1,000 corporate jobs as it merges its global tech and product teams to improve efficiency and reduce overlapping work. The restructuring is part of a broader effort to centralize operations at key hubs like its Bentonville headquarters, with affected employees given opportunities to apply for other internal roles or relocate.

Benzinga's Edge Rankings place Walmart ( WMT ) in the 88th percentile for quality and the 77th percentile for growth, reflecting its strong performance in both areas. Benzinga’s screener allows you to compare WMT’s performance with its peers.  

WMT Price Action: On a year-to-date basis, WMT shares climbed 7.61%, as per Benzinga Pro. On Thursday, after the results, the stock declined 7.27% to close at $121.34.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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