Dive Brief:

• Walmart reported Thursday that U.S. comparable sales increased 2.1% in the first quarter, just beating a forecast of 2% by Thomson Reuters but falling short of Cowen's predicted 2.4% growth. Comparable traffic rose 0.8% from the year-ago quarter, the slowest growth in more than a year by Bloomberg's estimate.

• U.S. online sales grew 33%, a rebound from slowed growth of just 23% last quarter, according to a press release. Total revenue at Walmart in the first quarter rose 4.4% to $122.7 billion, and net sales at Walmart International increased 11.7% to $30.3 billion.

• Sam's Club comparable sales increased 3.8%, with comparable traffic up 5.6%. "Sam's Club had one of its best quarters," Walmart CFO Brett Biggs told CNBC. "Fresh food has been a strength." He added that the redesign of Walmart.com and the launch of new brands into the assortment, including a recent partnership with Lord & Taylor, are driving growth.

Dive Insight:

After last quarter's lackluster e-commerce growth, analysts began to wonder if Walmart e-commerce chief Marc Lore was losing his touch, or even if he might leave the company (a notion he has publicly shot down multiple times). In the first three quarters of the last fiscal year, digital sales rose 63%, 60% and 50%, sequentially. But fourth-quarter results stalled comparatively, increasing just 23% and spurring a 10% drop in the company's stock price in just one day. It has fallen 14% so far this year.

Lore said at a Shoptalk event in March that the fourth quarter dip was largely planned. "We told the Street what we'd do in the quarter, and that was exactly what we did," he said. "We felt that reiterating 40% growth in the next year was enough, it obviously wasn't. We have 40% growth planned this year."

To Moody's Lead Retail Analyst Charlie O'Shea, improving e-commerce growth this quarter, as well as relatively flat gross and operating margins, "continues to reflect Walmart's significant spending to enhance its online capability; invest in people, price and stores; and battle Amazon for market share,” he said in a statement on the company's earnings release.

Digital sales aside, in-store sales numbers are showing that stores still matter, O'Shea also said, adding that Walmart is committed to being a leader in multi-channel retail. "Competition in retail remains acute on all fronts, and we believe Walmart is well-positioned to thrive against all competitors in this environment."

Walmart pointed to grocery (which makes up roughly 56% of the sales mix) as a highlight, reporting comps in the low single digits. Categories like fresh and packaged goods were particularly strong because of the growth in private brands, the company said. General merchandise comps were slightly positive, with results driven by solid comparable growth in home, automotive and wireless. Unseasonably cool weather in April somewhat impacted seasonal and lawn & garden categories.

Despite impressive e-commerce growth at Walmart and Target, Cowen analysts said in a report this week that their cross-shopping analysis still indicates both retailers have increasingly more customer overlap with Amazon. And according to a rolling survey of shoppers, customer satisfaction is deteriorating at Walmart and Target.

But Cowen analysts still believe Walmart is "agile and aggressive." Analysts were particularly encouraged by digital investments in the website (including its new partnership with Lord & Taylor), global strategy (notably including its $16 billion Flipkart buy) and grocery. "Improved inventory management; clean-fast-friendly programs; price/value focus; and delivery as well as time saving options for customers are all positives," Cowen analysts said a Thursday morning report on the earnings.

While digital investments aim to draw in younger, wealthier customers and rebrand the big-box retailer as an online fashion destination, stores and basics are still extremely relevant to the vast majority of Walmart's core customer. And if the retailer hopes to retain the edge over Amazon, it will need to continue to use its sprawling store fleet to its advantage and learn from its experiments. One recent lesson? In-store mobile scanning apparently doesn't work. After expanding its Scan & Go mobile checkout to 100 stores in January, the company recently ended the service.