Key Takeaways
- US comparable store sales increased 4.1% in Q1, marking the weakest growth rate in two years
- The company’s Q2 adjusted earnings per share forecast of 72–74 cents fell short of the Street’s 75-cent projection
- Overall revenue climbed 7.3% to reach $177.75 billion, surpassing analyst projections
- Advertising business surged 37%, while e-commerce revenue rose 26%
- Competitor Target delivered 5.6% comparable sales growth and increased its annual profit forecast
Shares of Walmart (WMT) tumbled approximately 2.6% during premarket hours Thursday following the retailer’s disclosure of its weakest comparable store sales performance in two years alongside forward earnings guidance that disappointed market expectations.
The stock was down about 2.5% in early Thursday trading.
Comparable sales across US locations — a critical performance indicator for retailers — advanced 4.1% during the quarter that concluded April 30. While this figure aligned with analyst forecasts, it represented a deceleration from the previous quarter’s 4.6% expansion and marked the slowest pace since the first quarter of 2024.
Customer transaction volume increased 3%, while the average basket size grew 1.1%.
The figure that most troubled market participants was the second-quarter earnings projection. Walmart provided adjusted EPS guidance ranging from 72 to 74 cents, falling below the FactSet consensus estimate of 75 cents.
Regarding full-year expectations, the retailer maintained its existing guidance of $2.75 to $2.85 in adjusted EPS — the identical “conservative” forecast initially provided in February.
Breaking Down Walmart’s Quarterly Performance
Quarterly revenue reached $177.75 billion, representing a 7.3% year-over-year increase and exceeding the consensus forecast of $174.89 billion.
Net profit jumped 18.8% to $5.33 billion. The adjusted earnings per share of 66 cents precisely met expectations.
Sam’s Club recorded comparable sales growth of 3.9%, outperforming the 3.3% estimate. Transaction counts climbed 6.2%, although the average purchase amount declined 2.2%.
The most impressive performance came from the company’s higher-margin operations. The advertising segment experienced a 37% revenue spike. Digital commerce sales vaulted 26% higher. Income from membership fees expanded 17.4%.
Elevated fuel expenses negatively impacted operating profit by approximately 250 basis points during Q1. The company indicated it attempted to internalize these cost increases to maintain competitive pricing for customers.
Despite these headwinds, US gross margin expanded by 29 basis points, supported by strength in membership income and advertising revenue.
Target’s Performance Creates Unfavorable Comparison
The report’s timing proved particularly challenging. Only one day prior, Target announced comparable sales growth of 5.6% — its strongest performance in four years — and elevated its annual profit guidance to the upper end of its projected range.
This head-to-head comparison amplified scrutiny of Walmart’s results, even in areas where the company exceeded expectations.
Chief Executive John Furner stated the performance demonstrates “continued focus on delivering across the enterprise — better shopping experiences, a broader assortment, and faster delivery.”
The retailer also emphasized significant market share expansion during the period, noting that affluent consumers are increasingly selecting Walmart for its convenience offerings and delivery capabilities.
Through Wednesday’s close, WMT stock had advanced 17.5% year-to-date. Target shares have climbed 25.2% during the same timeframe.
For the second quarter, Walmart anticipates net sales growth between 4% and 5%, compared to Wall Street’s projection of 5.09%.
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