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General merchandise retailer Wal-Mart (WMT Free Wal-Mart Stock Report) reported July-quarter results that were in line with our estimates. Total revenue of $123.4 billion was slightly above our $123 billion estimate and advanced 2.1% year over year. Earnings per share of $1.08 were a penny higher than our call as well as the prior year's fiscal second-quarter tally.

Walmart U.S. delivered solid same-store sales of 1.8%, on a 1.3% rise in traffic. This marked the 12th consecutive quarter of positive comp sales and the 11th straight with higher traffic. Food categories had the strongest quarterly comp-sales performance in five years thanks to traffic and mild food inflation. Inventory levels fell as WMT is taking measures to improve efficiency, but shelves remained well stocked.

E-commerce sales contributed 70 basis points of the domestic comp gain and grew 60% year over year. Most of that was organic and came through Walmart.com. The company continued to test and introduce new elements of its omni-channel shopping experience. Wal-Mart plans to have 100 automated “pickup towers” in stores across the U.S. by fiscal yearend. It also introduced Easy Reorder functionality, which allows customers to view and repurchase past in-store and online purchases to save time. The Scan & Go mobile app lets customers scan items and pay with a smartphone before showing a receipt to an associate. This program is gaining traction at Sam's club and will be rolled out to Walmart stores later this year. Online grocery is now available in more than 900 locations and has been getting mostly positive reception. The digital initiatives, coupled with solid traffic trends, are expected to fuel 1.5%-2.0% same-store sales growth in the October quarter.

Elsewhere, Sam's Club reported a 1.2% comp, led by a 2.1% rise in traffic. International sales fell 1%, but grew 2.5% on a constant-currency basis. Nine of WMT's 11 international markets had positive same-store sales, and five of those had comps greater than 5%. Walmex had the strongest showing with a 7% comp, but the struggling U.K. region was also positive.

Management raised the low end of its full-year earnings guidance range by a dime; it now stands at $4.30 to $4.40, in line with our $4.35 estimate. Third-quarter earnings are expected to land between $0.90 and $0.98, and we are leaving intact our $0.98 estimate.

This was another solid all-around quarter for Wal-Mart. We are encouraged by the company's dedication to developing an innovative e-commerce platform, as well as improving the in-store shopping experience. The sustained improvement in traffic and outsized e-commerce growth are evidence that the strategy is paying off. Although WMT shares are down following today's release, they are up a healthy 17% year to date. Still, we think there is room for further price appreciation over the next few years. Thus, conservative long-term investors may want to consider this relatively safe stock.

About The CompanyWal-Mart Stores, Inc. is the world’s largest retailer, operating 3,522 supercenters (includes sizable grocery departments), 415 discount stores, 660 Sam’s Clubs, and 735 Neighborhood Markets in the U.S., plus 6,363 foreign stores (mainly in Latin America, with the balance in Asia, Canada, and the U.K.) for total square footage of 1.164 billion (as of 1/31/17). Most stores are owned and are within 400 miles of an expanding network of distribution centers. Groceries accounted for 56% of U.S. sales, while sales per square foot were about $420.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.