Key Takeaways
- Second quarter adjusted earnings per share reached $0.81, surpassing analyst projections of $0.74
- Total revenue hit $187.9 billion, marking a 5.9% year-over-year increase and exceeding expectations
- U.S. comparable store sales increased only 2.6%, falling short of the 3.67% consensus forecast
- Updated full-year EPS guidance, while elevated, remained below Wall Street targets
- Shares tumbled 6% during Thursday’s premarket session
Shares of Walmart experienced a sharp 6% decline in Thursday’s premarket session following the retail giant’s second quarter results, which revealed disappointing U.S. comparable sales figures that overshadowed otherwise solid earnings and revenue performance.
The stock was changing hands at approximately $107.40 before the opening bell, representing a drop from Wednesday’s close of $114.30.
The company reported adjusted earnings per share of $0.81 for the second quarter, comfortably exceeding the Street’s consensus estimate of $0.74. Total revenue climbed to $187.9 billion, representing a 5.9% increase from the prior year period and beating the anticipated $186.75 billion.
However, the headline miss centered on comparable sales performance. U.S. stores operating under the Walmart banner recorded comp sales growth of merely 2.6%, significantly trailing the analyst consensus of 3.67%. This represents the weakest U.S. sales expansion in six years for the retailer.
Mizuho’s David Bellinger characterized the results as a “worst-case scenario” and labeled it “one of the biggest misses in years from WMT.”
The retailer has navigated challenging conditions throughout the summer months. Shares had already declined approximately 15% following the company’s previous quarterly report in mid-May, pressured by worries surrounding consumer spending among lower-income shoppers and inflationary headwinds related to the Iran War.
While the retailer is set to receive billions in tariff refunds, CFO John David Rainey indicated these funds will be allocated toward price reductions and enhancements to customer experience rather than margin expansion.
The gross profit rate expanded by 96 basis points, while operating income climbed 28.8%. When adjusted for constant currency, operating income growth measured 17.4%.
Positive Performance Indicators
The company’s global eCommerce segment posted 23% growth, fueled by strong performance in store-fulfilled pickup and delivery services, alongside marketplace expansion. Global advertising revenue jumped 38%, with Walmart U.S. advertising revenue matching that growth rate.
“Our team delivered another good quarter, and we continue to make steady progress on the long-term value drivers of our business,” said John Furner, President and CEO of Walmart.
Outlook Improved, Yet Falls Short
Looking ahead to fiscal 2027, Walmart elevated its full-year adjusted EPS outlook to a range of $2.80 to $2.87, representing an increase from the previous range of $2.75 to $2.85. The company now anticipates net sales growth of 4% to 5% on a constant currency basis, up from earlier guidance of 3.5% to 4.5%.
Wall Street analysts had been anticipating $2.90 in earnings per share and revenue growth of 5.5%. The updated projections missed expectations on both metrics.
For the third quarter, the company projects net sales growth between 3% and 3.75%, with adjusted operating income expected to expand 2% to 4%. Management noted that a timing shift of Flipkart’s Big Billion Days promotional event between the third and fourth quarters will create a headwind exceeding 100 basis points.
Notwithstanding today’s decline, analyst sentiment toward the stock remains overwhelmingly positive. According to FactSet data, 38 of 45 analysts maintain bullish ratings on Walmart, with a consensus price target approaching $140.
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