Key Takeaways
- Walmart shares plunged 9% to reach their lowest point in 2026 following second-quarter earnings release
- Comparable sales in the US increased a mere 2.6%, falling short of the 3.7% analyst consensus and marking the weakest growth in six years
- Transaction size expanded by only 1.1%, a significant decline from the previous year’s 3.1% growth rate
- Goldman Sachs reduced its price objective from $141 to $130 while retaining its Buy recommendation
- BofA Securities decreased its target from $144 to $126, maintaining its Buy stance
Shares of Walmart experienced a sharp 9.2% decline on Thursday, falling to their lowest level in 2026, following the retailer’s second-quarter earnings report that revealed signs of a weakening American consumer. The stock has now retreated more than 20% from its recent high.
While the retail giant surpassed earnings projections with adjusted earnings per share of $0.81 versus the anticipated $0.74, and revenue of $187.9 billion exceeded the $186.75 billion estimate, these positive metrics failed to impress the market. The company also upgraded its full-year outlook, yet investors remained unconvinced.
The critical metric that disappointed was comparable store sales. When fuel is excluded, these sales advanced only 2.6%, significantly trailing the 3.7% consensus estimate on Wall Street. This represents Walmart’s weakest comparable sales performance since the pandemic era.
When accounting for the negative impact from its health and wellness division, comparable sales reached 3.4%, which still fell below market expectations.
The average transaction value increased by a modest 1.1% during the quarter, representing a substantial decrease from the 3.1% growth rate observed in the same period last year. While customer traffic remains steady, shoppers are clearly reducing their spending per store visit.
Health Sector Creates Headwinds
A portion of the disappointing results stemmed from Walmart’s health and wellness operations. Government-mandated drug pricing negotiations generated a 0.8% drag on comparable sales, according to company disclosures.
The retailer announced plans to deploy $2.9 billion in tariff rebates to maintain competitive pricing. Additionally, Walmart projected an extra $2 billion in fuel-related expenses for the fiscal year.
During the first quarter, Walmart had already absorbed a $175 million profit reduction stemming from elevated energy expenses. Thursday’s report amplified these ongoing challenges.
According to Paul Hickey, an analyst with Bespoke Investment Group, the current report has intensified the negative sentiment that began emerging following the first-quarter results.
Analysts Lower Price Projections
Kate McShane, an analyst at Goldman Sachs, reduced her price target on WMT from $141 to $130 while maintaining her Buy rating. McShane highlighted the improved second-half guidance, double-digit eCommerce profit margins, and opportunities for market share expansion as justifications for her optimistic outlook.
Goldman’s earnings per share projection for 2026 decreased approximately 2%, closely tracking the stock’s percentage decline.
BofA Securities similarly reduced its price objective from $144 to $126 while keeping its Buy rating intact. BofA emphasized the slowdown in US comparable sales and observed that Walmart’s elevated valuation multiples amplified the negative market response.
The company has increased its dividend payout for 31 straight years.
Dan Sheehan, who serves as director of portfolio management at Telos Family Office, noted that company leadership characterized consumers as “resilient” while recognizing that elevated food and energy prices are placing strain on household finances.
Retail sales in the United States contracted 0.6% in July, substantially missing the projected 0.1% gain. Analysts at Goldman Sachs have indicated that inflation-adjusted consumer spending growth may decelerate to approximately 1% during the second half of 2026.
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