Key Takeaways
- Second quarter adjusted earnings per share reached $0.81, surpassing the $0.74 Wall Street projection
- Total revenue hit $187.9 billion, reflecting 5.9% annual growth and exceeding analyst forecasts
- U.S. comparable sales increased only 2.6%, falling short of the 3.67% consensus projection
- Updated full-year adjusted EPS outlook still trails analyst expectations despite upward revision
- Shares declined 6% during Thursday’s premarket session
Shares of Walmart tumbled 6% during premarket hours Thursday as the retail giant’s U.S. comparable sales expansion significantly underperformed Wall Street projections, even though the company exceeded both earnings and revenue expectations.
WMT shares were changing hands near $107.40 in premarket activity, representing a decline from the previous close of $114.30.
The retailer delivered adjusted earnings per share of $0.81 for the second quarter, exceeding the $0.74 analyst consensus. Total revenue climbed to $187.9 billion, representing a 5.9% year-over-year increase and surpassing the $186.75 billion forecast.
However, the disappointment centered on comparable sales performance. U.S. Walmart-only locations recorded comp sales growth of merely 2.6%, significantly below the 3.67% consensus projection. This represents the company’s weakest U.S. sales expansion in six years.
Mizuho analyst David Bellinger characterized the results as a “worst-case scenario” and “one of the biggest misses in years from WMT.”
The retail behemoth has faced headwinds throughout the summer months. Shares had already retreated approximately 15% following the previous earnings announcement in mid-May, pressured by worries surrounding lower-income consumer spending patterns and inflation related to the Iran War.
While the company stands to receive billions in tariff refunds, CFO John David Rainey indicated these proceeds will be allocated toward price reductions and customer experience enhancements instead of margin expansion.
The gross profit rate expanded by 96 basis points, while operating income jumped 28.8%. When adjusted for constant currency, that metric registered 17.4% growth.
Positive Developments
International eCommerce sales advanced 23%, fueled by store-fulfilled pickup services, delivery options, and marketplace expansion. Worldwide advertising revenue soared 38%, with Walmart U.S. advertising 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.
Forecast Upgraded, Yet Still Falls Short
Looking ahead to fiscal 2027, Walmart increased its full-year adjusted EPS forecast to a range of $2.80 to $2.87, up from the previous range of $2.75 to $2.85. Net sales growth expectations now stand at 4% to 5% in constant currency, improved from prior guidance of 3.5% to 4.5%.
Wall Street analysts had anticipated $2.90 per share and 5.5% sales expansion. The updated forecast missed targets on both metrics.
For the third quarter, Walmart projected net sales growth between 3% and 3.75% and adjusted operating income growth of 2% to 4%. Management highlighted a headwind exceeding 100 basis points related to a timing shift of Flipkart’s Big Billion Days event between the third and fourth quarters.
Notwithstanding the selloff, analyst sentiment remains largely positive. Among 45 analysts monitored by FactSet, all except seven maintain bullish ratings on Walmart, with a consensus price target approaching $140.
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