Walmart raised its full-year sales and earnings outlook on Thursday after another strong quarter in e-commerce and groceries, even as higher tariffs and one-time charges weighed on profits.

For the quarter ended July 31, Walmart reported revenue of $177.4 billion, topping expectations of $176.2 billion. Adjusted earnings came in at 68 cents a share, below the 74 cents analysts projected—its first quarterly earnings miss since May 2022.

The retail giant now expects net sales to rise between 3.75% and 4.75% for the fiscal year, up from prior guidance of 3% to 4%. Adjusted earnings per share are forecast at $2.52 to $2.62, slightly above its previous range of $2.50 to $2.60.

Comparable U.S. sales excluding fuel rose 4.6%, beating analyst forecasts, with strength in groceries, health and wellness, and general merchandise such as apparel and fashion. Sam’s Club comparable sales climbed 5.9%, also above estimates. Globally, e-commerce surged 25%, including 26% in the U.S., fueled by rapid growth in grocery delivery and third-party marketplace sales.

Advertising revenue remains a bright spot, with global ads up 46% year over year, supported by contributions from smart-TV maker Vizio, which Walmart acquired for $2.3 billion last year. In the U.S., Walmart Connect grew 31%.

CFO John David Rainey said Walmart’s strategy has been to shield consumers from steep tariff-driven price increases by absorbing some costs and offsetting others through efficiencies. “There are certainly areas where we’ve fully absorbed the impact of higher tariff costs,” he said. “There are other areas where we’ve had to pass some of those costs along.” Prices rose about 1% in the quarter, slower than the national average. Still, he warned that “tariff-impacted costs are continuing to drift upwards.”

CEO Doug McMillon said on the earnings call that middle- and lower-income shoppers have been more sensitive to price increases in discretionary categories. “We see a corresponding moderation in units at the item level as customers switch to other items, or in some cases, categories,” he said.

Walmart continues to place early import orders to lock in prices and manage inventory ahead of the holiday season, while trimming higher-cost goods more exposed to tariffs. At quarter-end, inventory rose 3.5% at Sam’s Club and 2.2% at Walmart U.S.

The company also incurred $450 million in legal-related costs tied to worker and shopper injury claims, along with restructuring charges and higher insurance costs, which weighed on earnings. Executives said the number of claims hasn’t risen, but costs per claim have.

Despite these headwinds, Walmart is pulling further ahead of rivals. Target reported another quarterly sales decline this week, while Home Depot and Lowe’s posted growth of about 1%. Amazon, by comparison, saw online sales climb 11%.

Rainey said Walmart is “playing offense,” gaining share across income levels by offering value-driven groceries, expanding into trend-driven categories like fashion and exclusive brands, and leaning on its delivery network and Walmart+ membership. “Everyone is looking to see if there are any creaks in the armor with the consumer, but it’s been very consistent. They continue to be resilient,” he said.