A return to retail basics has been a key driver behind the recent momentum at Wal-Mart U.S., including its first-quarter revenue beat.
Yet as the world's largest retailer moves through these fundamentally simple fixes, which include cleaning up its stores and shortening the wait time at checkout, CEO Doug McMillon told CNBC there are more opportunities to improve its in-store operations.
One of the most promising of those opportunities, McMillon said, is trimming the amount of inventory it has on hand. By doing so, it can declutter the backroom of its stores (thereby speeding up the amount of time it takes a worker to locate certain products), and focus on keeping key items in stock.
"There's still a lot of upside as it relates to that, and that's kind of like oxygen to a store," McMillon said.
Jefferies analyst Daniel Binder, who on Monday upgraded Wal-Mart shares to "buy" from "hold," said the retailer's inventory growth has either matched or come in lower than sales since the second quarter of last year. This discipline has helped boost Wal-Mart's gross margin, as it has been forced to take fewer markdowns, the analyst said.
By becoming more efficient in this area, the retailer should also be able to allocate some of its savings toward lowering prices for shoppers, Binder said.
Still, there are some places where investors should not expect Wal-Mart to immediately turn up the heat. As the company's digital sales continued to decelerate in the first quarter, McMillon said Wal-Mart would not push the pedal down on touting these services until it gets the "fundamental building blocks" in place. Those include broadening its assortment and making sure its search capabilities are up to snuff.
"Until [those building blocks are] all there we won't really aggressively market walmart.com as much as ultimately I believe that we will," he said.
Though the CEO said there are bright spots in its online business, including grocery, he admitted that the company would "like to be growing faster [online] than we are right now."
Neil Ashe, who heads up Wal-Mart's global e-commerce, told analysts earlier that day that the site pulled in 87 million unique visitors in April, making it consistently the second-largest retail site in the U.S.