Key Highlights
- Comparable store sales in the US expanded 4.1% during Q1, marking the weakest growth rate in 24 months
- Management’s Q2 adjusted earnings per share forecast of 72–74 cents fell short of the 75-cent analyst consensus
- Quarterly revenue climbed 7.3% to reach $177.75 billion, surpassing Wall Street projections
- Digital advertising income surged 37% while online sales advanced 26%
- Competitor Target delivered 5.6% comparable sales expansion and upgraded its annual profit guidance
Shares of Walmart (WMT) declined approximately 2.6% during Thursday’s premarket session following the retailer’s quarterly earnings report that revealed decelerating comparable sales momentum and a profit forecast that disappointed investors.
WMT stock was showing losses of roughly 2.5% in early Thursday trading.
Comparable store sales across US locations — a critical performance indicator in retail — increased 4.1% during the fiscal quarter concluded April 30. While this figure aligned with analyst projections, it represented a deceleration from the previous quarter’s 4.6% expansion and marked the slowest growth rate since the first quarter of 2024.
Customer transaction volume increased 3% while the average purchase amount grew 1.1%.
The most concerning element for market participants was the second-quarter earnings projection. Walmart provided guidance for adjusted earnings per share between 72 and 74 cents, falling below the FactSet consensus estimate of 75 cents.
Regarding full-year expectations, management maintained its previous guidance range of $2.75 to $2.85 in adjusted EPS — the same “conservative” projection established in February.
Breaking Down Walmart’s Financial Performance
Quarterly revenue reached $177.75 billion, representing a 7.3% year-over-year increase and exceeding the $174.89 billion analyst consensus.
Net earnings advanced 18.8% to $5.33 billion. Adjusted earnings per share of 66 cents precisely matched Wall Street estimates.
Sam’s Club delivered comparable sales growth of 3.9%, outperforming the 3.3% consensus forecast. Transaction counts jumped 6.2%, although average ticket size declined 2.2%.
The most impressive results emerged from higher-margin business segments. Digital advertising revenue skyrocketed 37%. E-commerce revenue surged 26%. Membership subscription income grew 17.4%.
Elevated fuel expenses negatively impacted operating income by approximately 250 basis points during Q1. The company indicated it absorbed much of these increased costs rather than passing them along to maintain competitive pricing.
Despite these headwinds, US gross profit margin expanded by 29 basis points, supported by membership and advertising revenue growth.
Target’s Performance Creates Unfavorable Comparison
The timing of Walmart’s earnings release proved unfortunate. One day prior, Target announced comparable sales growth of 5.6% — its strongest performance in four years — and elevated its full-year profit forecast to the upper end of its guidance range.
This head-to-head comparison intensified scrutiny of Walmart’s results, even in areas where the company exceeded expectations.
CEO John Furner characterized the results as reflecting “continued focus on delivering across the enterprise — better shopping experiences, a broader assortment, and faster delivery.”
Management also emphasized significant market share gains achieved during the quarter, particularly among higher-income consumers increasingly selecting Walmart for convenience-oriented services and delivery options.
WMT stock had still posted gains of 17.5% year-to-date through Wednesday’s close. Target shares advanced 25.2% during the identical period.
For the second quarter, Walmart anticipates net sales growth ranging from 4% to 5%, compared to the analyst consensus of 5.09%.
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
