Walmart (WMT), the world’s largest retailer, reported better-than-expected earnings during the first quarter, driven by strength in its U.S. e-commerce business.

For the first quarter, Walmart delivered adjusted earnings per share of $1.13, surpassing Wall Street analysts’ expectations of $1.02. Revenue for the quarter came in at $123.9 billion, compared to estimates of $124.94 billion.The closely followed comp sales number came in at 3.4%, marking the best first quarter in 9 years, the retailer noted. The comp store sales number was in-line with expectations.

Walmart said its e-commerce sales in the U.S. grew 37% during the quarter, driven by strong growth in online grocery and its home and fashion categories on Walmart.com.

"We're changing to enable more innovation, speed and productivity, and we're seeing it in our results,” CEO Doug McMillon said in a statement. “We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S. Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank them for a strong start to the year."

Grocery has been a bright spot for Walmart’s e-commerce strategy. At the end of the quarter, Walmart has 2,450 stores with grocery pickup in the U.S. and nearly 1,000 locations with delivery. The retailer expects to offer grocery pickup at 3,100 of its stores and delivery at 1,600 of those locations by year-end.

With competition intensifying with retail giant Amazon (AMZN), Walmart announced this week that it will roll out next day delivery without a membership fee for orders of $35 and more. The offering will begin in Phoenix and Las Vegas before expanding to Southern California and gradually reaching 75% of the U.S. population, the retailer said.

Tariff threat

Elsewhere, the retailer said it’s watching the tariff situation as trade tensions increase between the U.S. and China.

“We’re monitoring the tariff discussions and are hopeful that an agreement can be reached,” CFO Brett Biggs said in a statement. “Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind. Our merchant teams have been focused on this for months and continue to execute appropriate mitigation strategies.”

On a call with reporters, Biggs said tariffs would result in higher prices for shoppers.

“We are going to continue to do everything we can to keep prices low. However, increased tariffs will lead to increased prices for our customers,” he said.