TLDR
- Walmart stock fell 3% after missing Q2 earnings at $0.68 vs $0.74 expected
- Revenue exceeded forecasts at $177.4 billion, beating $176.05 billion estimate
- Full-year sales guidance raised to 3.75%-4.75% from previous 3%-4% range
- Tariff costs and rising expenses are pressuring profit margins
- E-commerce growth remains strong with double-digit expansion continuing
Walmart Inc. (WMT) shares dropped more than 3% in pre-market trading Thursday following second-quarter earnings that missed Wall Street expectations.
The retail giant reported adjusted earnings per share of $0.68, falling short of the $0.74 analyst consensus. However, revenue provided a bright spot at $177.4 billion, surpassing estimates of $176.05 billion.
Strong Sales Growth Continues
Walmart’s US same-store sales jumped 4.6% in the quarter, beating the 4.2% Wall Street forecast. Sam’s Club performed even better with 5.9% same-store sales growth versus 5.3% expectations.
The company gained market share across all income levels, with upper-income households leading the growth. Grocery sales rose by mid-single digits while health and wellness categories posted mid-teens percentage increases.
CEO Doug McMillon credited innovation and execution for the momentum. “The top-line momentum we have in our business comes from how we’re innovating and executing,” McMillon stated.
Despite strong sales, rising costs are squeezing profitability. Tariffs, insurance claims, litigation settlements, and restructuring expenses all pressured margins during the quarter.
Walmart is absorbing higher import duties rather than passing full costs to consumers. This customer-friendly strategy protects shoppers but hurts bottom-line results.
The company reported 1.1% like-for-like inflation in US stores. Bank of America estimates roughly 15% of Walmart’s US sales come from Chinese imports, making tariff impact material.
McMillon previously warned that narrow retail margins prevent absorbing all tariff pressure. Price increases already occurred in April and May as the company began passing through some costs.
Digital Momentum Persists
Walmart’s e-commerce business delivered another quarter of double-digit growth, helping maintain competitive positioning against Amazon and other online retailers.
This digital expansion supports the company’s omnichannel strategy as consumers increasingly blend online and in-store shopping experiences.
Management raised full-year sales guidance to 3.75%-4.75% growth from the previous 3%-4% range, showing confidence in continued momentum.
Adjusted earnings per share guidance increased slightly to $2.52-$2.62 from $2.50-$2.60. For the current quarter, Walmart expects $0.58-$0.60 per share.
The guidance raise reflects management’s belief that strong consumer demand will persist despite economic headwinds and cost pressures.
Walmart stock closed Wednesday at $102.58 before the after-hours decline. The company remains the world’s largest retailer by revenue at approximately $681 billion annually.
