Walmart Inc. (NASDAQ:WMT) shares fell around 6% in premarket trading on Thursday after the retail giant reported stronger-than-expected second-quarter earnings and revenue, but disappointed investors with weaker comparable sales growth at its U.S. stores.
Adjusted earnings came in at $0.81 per share, beating the analyst consensus of $0.74 by $0.07. Revenue increased 5.9% year on year to $187.9 billion, also exceeding Wall Street expectations of $186.75 billion.
Despite the headline beat, investors focused on Walmart-only U.S. comparable sales excluding fuel, which increased 2.6%, well below the 3.67% consensus estimate.
U.S. comparable sales growth disappoints investors
Walmart’s 2.6% comparable sales increase in the U.S. represented its slowest growth rate in six years, despite transaction growth providing some support.
Performance also faced an 80-basis-point headwind from the health and wellness category.
The weaker-than-expected figure prompted a sharp reaction from analysts. Mizuho analyst David Bellinger described the results as a “worst-case scenario” and a “very messy print and one of the biggest misses in years from WMT.”
The sales disappointment ultimately outweighed Walmart’s better-than-expected earnings and revenue, driving the pronounced premarket decline.
E-commerce and advertising remain strong growth areas
Digital operations continued to perform strongly, with global e-commerce sales increasing 23%. Growth was led by store-fulfilled pickup and delivery services as well as Walmart’s marketplace business.
Advertising also maintained strong momentum. Walmart’s global advertising revenue surged 38%, with its U.S. advertising operations recording the same rate of growth.
“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.
The performance of these higher-growth businesses provides an important counterweight to slower comparable sales across Walmart’s traditional U.S. retail operations.
Walmart raises full-year earnings and sales outlook
Despite the negative market reaction, Walmart increased several elements of its fiscal 2027 guidance.
The retailer now expects adjusted earnings per share of between $2.80 and $2.87, compared with its previous range of $2.75 to $2.85. The new midpoint of $2.835 is above the prior midpoint of $2.80.
Full-year net sales are forecast to increase between 4.0% and 5.0% in constant currency, an improvement from the previous outlook of 3.5% to 4.5%.
For the third quarter, Walmart expects adjusted EPS of $0.62 to $0.64, giving a midpoint of $0.63 compared with $0.62 in the same period last year.
Third-quarter net sales are projected to increase between 3.0% and 3.75% in constant currency, while adjusted operating income is expected to grow 2.0% to 4.0%.
Walmart warned that the timing of Flipkart’s Big Billion Days between the third and fourth quarters is expected to create a headwind of more than 100 basis points to third-quarter growth.
Tariff refunds boost margins and operating income
Profitability benefited significantly from tariff refunds during the quarter.
Gross profit rate improved by 96 basis points, primarily reflecting those refunds, while operating income increased 28.8%. On an adjusted constant-currency basis, operating income rose 17.4%.
Chief Financial Officer John David Rainey said Walmart intends to direct the tariff refunds received during the second quarter towards customer experience improvements and price investments during the second half.
While stronger earnings, e-commerce growth, advertising momentum and upgraded full-year guidance offered several positives, investors focused on the significant U.S. comparable sales miss. The 6% premarket decline suggests concerns about slowing domestic retail momentum currently outweigh the company’s improving full-year outlook.
Walmart stock price
