Key Takeaways
- Walmart shares plummeted more than 6% Thursday, marking the retailer’s steepest single-day decline in over 13 months
- First-quarter earnings per share of 66 cents aligned with analyst projections; revenue hit $177.75B, topping forecasts, though second-quarter outlook disappointed
- CFO John David Rainey highlighted uneven spending patterns, noting lower-income customers are feeling the squeeze as gasoline reaches $4.56 per gallon
- Digital commerce climbed 26% from last year; ad business jumped 37%
- Annual sales forecast unchanged, projected to reach the higher end of the 3.5%–4.5% expansion target
Walmart delivered a respectable performance by most metrics — revenues exceeded projections, profit matched expectations, and digital operations thrived. Yet investors hammered the stock regardless, and the reason is clear.
The retail giant provided second-quarter profit guidance ranging from 72 to 74 cents per share. Analysts had penciled in 75 cents. That single-cent shortfall triggered a selloff exceeding 6% on Thursday, representing WMT’s sharpest daily decline in more than 13 months.
Shares had already enjoyed a strong run — climbing over 17% year-to-date before earnings, surpassing the S&P 500’s performance. With such momentum, there was little cushion for anything less than perfection.
For the three months ending April 30, Walmart delivered adjusted earnings of 66 cents per share, matching Wall Street’s target and improving from 61 cents in the prior-year period. Total revenue reached $177.75 billion, representing 7.3% annual growth and exceeding the $175 billion analyst consensus.
Bottom-line profit jumped nearly 19% year-over-year to $5.33 billion.
Gasoline Costs Are Altering Consumer Behavior
CFO John David Rainey spoke frankly about shifting dynamics in customer spending patterns. National gasoline prices have surged to $4.56 per gallon, a sharp increase from $3.18 twelve months earlier. This spike is placing significant strain on lower-earning households and influencing their purchasing decisions.
“The headline consumer is reasonably healthy, but when you look underneath, the pressure is uneven,” Rainey said. “The low-income shopper you can tell is more budget conscious.”
There’s an upside, however: these economic pressures are driving additional traffic to Walmart. Affluent shoppers are increasingly using the retailer’s delivery options and exploring higher-margin departments including fashion and beauty products.
Elevated fuel expenses have also increased Walmart’s operational costs related to transportation infrastructure and e-commerce fulfillment.
Domestic comparable store sales increased 4.1% during the reporting period, meeting expectations but representing the slowest growth rate since the beginning of 2024.
For comparison, competitor Target reported comparable sales expansion of 5.6% one day earlier and raised its annual projections.
Digital Commerce and Media Business Drive Growth
Walmart’s online operations continue demonstrating robust momentum. Worldwide e-commerce revenue expanded 26% year-over-year, with digital channels now representing approximately one-quarter of global sales volume.
Advertising income soared 37%. Membership subscription revenue increased 17.4%.
At the Sam’s Club warehouse division, comparable sales grew 3.9%, exceeding analyst projections, while customer traffic rose 6.2%.
Walmart indicated it will continue emphasizing competitive pricing to gain additional market share amid evolving consumer conditions.
The company also revealed it has submitted claims for tariff reimbursements following a Supreme Court decision that invalidated certain trade levies. Rainey estimated Walmart had paid approximately $2.4 billion under those tariffs but cautioned the company doesn’t anticipate a substantial financial recovery from the filing.
Full-year projections remain intact, with revenue growth expected to approach the upper boundary of the 3.5% to 4.5% target range.
Wall Street analyst consensus continues skewing positive, with most firms maintaining buy recommendations on WMT shares.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
