Key Takeaways:
Walmart reported adjusted EPS of $0.81, beating the $0.74 consensus, but shares fell 7.7% premarket as US same-store sales growth hit a six-year low.
"Stores increasingly serve as digital fulfillment hubs for online orders and delivery," Chief Financial Officer John David Rainey said, playing down the importance of the comparable-sales metric.
Walmart U.S. comparable sales rose 2.6%, the smallest quarterly increase since 2020, as pharmacy deflation tied to new maximum fair price regulations created a 125-basis-point headwind. The company raised its fiscal 2027 adjusted EPS outlook to $2.80-$2.87 from $2.75-$2.85 and lifted sales guidance to $734.7B-$741.7B — both still below analyst estimates of $2.90 and $752.3B.
The guidance gap drove the premarket decline, with shares trading at $105.49. Global advertising revenue rose 38%, e-commerce grew 23%, and membership fee income increased 17%, while gross margin expanded 96 basis points to 25.4%. Adjusted operating income rose 17.4% on a constant-currency basis.
For the third quarter, Walmart forecast adjusted EPS of $0.62-$0.64, below the $0.68 estimate, and sales of $183.1B-$184.5B versus the $188.3B consensus. The company rolled back prices on 11,000 items in the US during the quarter and said it began receiving tariff refunds, which management pledged to use for lowering prices. Inventory rose 6.7% to $61.6B, while free cash flow fell $1.4B to $5.5B despite operating cash flow climbing to $19.7B.
The results contrast with Target, which reported 3.8% comparable-sales growth and raised its annual sales outlook on Wednesday, while Kroger and Costco have been cutting food prices to win share. Walmart's weaker comps and cautious guidance signal a softening US consumer, with high fuel prices pressuring low-income households and August consumer confidence falling for the first time in three months.
The guidance raise shows management expects stronger second-half sales from price investments, but the persistent gap to consensus leaves little room for error. Investors will watch the back-to-school season and whether tariff refunds translate into margin gains on the next earnings call.
This article is for informational purposes only and does not constitute investment advice.
