Investors are stocking up on Walmart shares on Tuesday after the big box retailer issued upbeat earnings guidance and announced a new $20bn share buyback programme ahead of its annual investor day in Bentonville, Arkansas.

The stock rose as much as 2.6 per cent in pre-market trading, putting it on track to extend its year to date gain to over 17 per cent.

In a trading update, Walmart reiterated its guidance for the current 2018 fiscal year. However it said it expected earnings to climb 5 per cent in the next fiscal year as its investment in ecommerce continues to pay off. Net sales are expected to grow 3 per cent for the fiscal 2019 year, driven by same store sales growth as well as what it predicts will be a 40 per cent jump in US online sales.

“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” said chief executive Doug McMillon.

Walmart has been making substantial investments in ecommerce in its battle for US retail dominance against Amazon, buying Jet.com for $3.3bn last summer and niche websites including ModCloth, a women’s clothing seller, and Moosejaw, an outdoor gear site.

The company said it planned to spend $11bn this fiscal year and next in capital expenditure as it pushes ahead with store remodeling and ramping up its digital drive.

In a sign that it plans to leverage its physical presence as a bulwark against Amazon’s foray into food retailing through its Whole Foods acquisition, Walmart is also planning to add 1,000 online-grocery locations to help fill orders from customers buying their food on Walmart.com.

“We’re combining the accessibility of our stores with eCommerce to provide new and
exciting ways for customers to shop,” said Mr McMillon.

Walmart added the new $20bn share repurchase programme announced on Tuesday will be done over a 2 year period.

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