Key Takeaways:
Walmart reported Q2 adjusted EPS of $0.81 on revenue of $187.9 billion, beating consensus estimates of $0.74 and $186.75 billion, respectively.
"Our business model is only getting stronger and more durable, and this gives us confidence to raise our sales and operating income growth guidance for the year," Chief Financial Officer John David Rainey said.
Enterprise net sales rose 5 percent in constant currency, at the top end of guidance. Adjusted operating income increased 17.4 percent in constant currency, including a net benefit of approximately 750 basis points from tariff refunds. Excluding that benefit, underlying operating income growth was at the top end of the company's 7 percent to 10 percent guidance range.
Despite the beat, shares fell 8.91 percent to $104.12 in premarket trading, near the lower end of the 52-week range of $95.42 to $135.16. The stock trades at a P/E ratio of 40.33, and InvestingPro analysis flags it as overvalued at current levels.
Walmart U.S. comparable sales rose 2.6 percent excluding fuel, the slowest pace since 2020, pressured by a 125 basis point headwind from Maximum Fair Price regulation on health and wellness sales. Sam's Club U.S. comps increased 4.4 percent, and international sales rose 7.9 percent in constant currency, led by China and India.
The company's higher-margin platform businesses continued to scale. Global eCommerce grew 23 percent, U.S. marketplace net sales jumped 52 percent, and global advertising increased 38 percent, with Walmart Connect up 43 percent. Membership fee revenue rose 17 percent globally to an all-time high.
Walmart raised full-year fiscal 2027 guidance, now expecting constant-currency sales growth of 4 percent to 5 percent, up from 3.5 percent to 4.5 percent. Operating income growth guidance was lifted to 7 percent to 8.5 percent from 6 percent to 8 percent, and EPS guidance moved to $2.80 to $2.87 from $2.75 to $2.85.
For Q3, Walmart expects sales growth of 3 percent to 3.75 percent, operating income growth of 2 percent to 4 percent, and EPS of $0.62 to $0.64. Management said the guidance embeds more than $2 billion of incremental fuel-related costs and a 20 basis point operating income headwind from the Vibe acquisition.
The company deployed more than 11,000 rollbacks during the quarter, up from roughly 7,200 at the end of Q1, as it reinvests tariff refunds into price leadership. Rainey said investors should assess Q2 and Q3 together, with combined operating income growth averaging approximately 10 percent per quarter.
CEO John Furner said the company's connected business model is driving durable share gains. "The math is not simply one plus one equals two," he said. "The value comes from how these businesses work together, with each one strengthening the others."
The guidance raise signals management expects price investments to drive sustained share gains into the second half. Investors will watch Q3 results for evidence that rollbacks are translating into durable traffic and unit growth, particularly in food categories where management reported one of its strongest share performances in some time.
This article is for informational purposes only and does not constitute investment advice.
