Slower U.S. Sales Growth Weighs on Walmart Despite Strong Q2

Walmart’s Strong Headline Results Meet a Tougher Growth Test

Walmart (WMT) delivered fiscal second-quarter revenue of $187.9 billion, up 5.9% year over year and ahead of Wall Street expectations. Adjusted earnings of $0.81 per share also topped the $0.74 consensus estimate, while global e-commerce sales increased 23%.

The earnings reaction was much weaker than those headline numbers suggested. WMT stock fell roughly 9% as U.S. comparable sales increased just 2.6%, missing expectations and marking Walmart’s slowest quarterly comparable-sales growth in more than six years. A weaker third-quarter outlook added to the pressure.

Key Points

• Walmart posted $187.9 billion in second-quarter revenue and adjusted earnings of $0.81 per share, beating Wall Street estimates on both measures.
• U.S. comparable sales increased 2.6%, below expectations and down from 4.1% in the previous quarter, although growth was 3.4% excluding health and wellness.
• Walmart raised its full-year outlook but guided third-quarter adjusted earnings to $0.62-$0.64 and constant-currency revenue growth to 3%-3.75%, disappointing investors.

Why Did Walmart Stock Fall After Beating Expectations?

The market reaction centered less on what Walmart reported and more on the composition of the quarter and the outlook ahead.

Walmart U.S. comparable sales excluding fuel grew 2.6%. That was below Wall Street expectations of roughly 3.5%-3.8% and represented a clear slowdown from recent quarters. U.S. comps had increased 4.1% in the first quarter, 4.6% in the fourth quarter, and 4.5% in the third quarter.

Health and wellness was a major factor behind the slowdown. New maximum fair price regulations affecting prescription drugs reduced reported comparable-sales growth. Excluding health and wellness, Walmart said core merchandise comparable sales increased 3.4%.

Management also noted that the company was comparing against strong GLP-1 adoption during the previous two years.

Even with those factors, the market focused on the slower reported U.S. growth rate because Walmart had entered the quarter with a reputation for consistently outperforming in an environment where consumers increasingly favored value.

The company’s third-quarter guidance reinforced that caution. Walmart expects adjusted EPS of $0.62 to $0.64 and constant-currency revenue growth of 3% to 3.75%. The revenue outlook represents a meaningful slowdown from the second quarter’s 5.1% constant-currency growth.

It is also the third consecutive quarter in which Walmart has issued adjusted EPS guidance below expectations, according to the supplied material.

Price Cuts and E-Commerce Continue to Support Growth

The weaker comparable-sales number does not mean Walmart’s business weakened across every category.

U.S. e-commerce sales increased 24%, while global e-commerce grew 23%. Membership fee revenue increased 17%, and advertising revenue rose 38%.

Walmart U.S. generated $125.2 billion in sales, up 3.5% from the previous year. Grocery delivered mid-single-digit growth, with strength in personal care, beauty and pet supplies, while general merchandise increased by low single digits.

Sam’s Club U.S. also produced stronger comparable-sales growth than Walmart’s main domestic business. Sam’s Club comps excluding fuel increased 4.4%, accelerating from 3.9% in the previous quarter, while its e-commerce sales climbed 26%.

Walmart International revenue increased 12.8% year over year to $35.2 billion, or 7.9% on a constant-currency basis.

Price remains central to Walmart’s strategy. The retailer implemented more than 11,000 rollbacks during the second quarter, up from roughly 7,200 at the end of the first quarter.

CEO John Furner said Walmart is investing heavily in price because customers need greater value and because the company believes lower prices can support market-share gains over time.

That approach is particularly relevant as management sees additional pressure on household budgets.

CFO John David Rainey said consumer trade-offs became more visible when fuel prices moved above $4 per gallon, with June showing a clearer shift in spending behavior.

Walmart also continued attracting higher-income households, including customers earning more than $100,000 annually.

Tariff Refunds Lift Results but Also Fund Lower Prices

Tariff refunds were an important part of Walmart’s second-quarter earnings and its updated outlook.

The company said it is eligible for roughly $2.9 billion in tariff refunds and has received substantially all of them. Gross profit rate reached 25.4%, with tariff refunds contributing to the increase.

Operating income grew roughly 21% year over year, while adjusted operating income increased 17.4% in constant currency.

However, Walmart is not treating the tariff refunds solely as an earnings benefit.

Management said the funds are being reinvested into lower prices and the customer experience, with particular focus on grocery and general merchandise. The company expects the effects of those price investments to continue into the third quarter.

That creates an important distinction within the earnings reaction.

The tariff refunds supported second-quarter profitability, but Walmart is using much of that benefit to reinforce its value positioning rather than allowing it to flow entirely through to future earnings.

The company is also dealing with higher operating costs elsewhere. Walmart expects more than $2 billion in fuel-related headwinds this year.

Its full-year outlook now calls for net sales growth of 4% to 5%, up from the previous 3.5% to 4.5% range. Adjusted EPS is expected between $2.80 and $2.87, compared with the previous range of $2.70 to $2.85.

Those increases were still below analyst expectations cited in the supplied material, which called for approximately 5.5% sales growth and adjusted earnings closer to $2.90-$2.97 per share.

What It Means for Investors

Walmart’s quarter illustrates why an earnings beat does not always translate into a positive earnings reaction.

Revenue, adjusted earnings, e-commerce growth and operating income were all strong. The company also raised its full-year outlook.

But investors focused on a different set of numbers: U.S. comparable sales of 2.6%, slower domestic growth, weaker-than-expected third-quarter guidance and the extent to which tariff refunds contributed to the earnings upside.

The consumer backdrop adds another layer.

Walmart said customers began making more visible trade-offs when gasoline moved above $4 per gallon. At the same time, management continues to cut prices aggressively, with more than 11,000 rollbacks during the quarter.

That positioning can support traffic and market share, but it also means Walmart is deliberately reinvesting some of its financial benefits into price leadership.

The company’s digital operations remain an important counterweight. U.S. e-commerce rose 24%, global e-commerce increased 23%, advertising grew 38%, and membership fee revenue rose 17%.

The central issue after the report is therefore not whether Walmart continues to grow. It does. The question is whether its U.S. comparable-sales growth and near-term earnings trajectory can regain enough momentum to satisfy expectations that had been built around the company’s recent record of consistent execution.

Conclusion

Walmart’s fiscal second quarter produced stronger-than-expected revenue and earnings, continued digital growth, higher operating income and an improved full-year outlook.

The stock’s roughly 9% decline reflects what sat underneath those results.

U.S. comparable sales slowed to 2.6%, missing expectations and reaching their weakest growth rate in more than six years. Third-quarter revenue and earnings guidance also came in below the market’s expectations.

Health and wellness pricing regulation explains part of the comparable-sales slowdown, with core merchandise comps rising 3.4% when that category is excluded. Tariff refunds also strengthened reported profitability, while Walmart is directing much of that benefit toward additional price cuts.

The result is a mixed stock market signal: Walmart continues to expand sales, e-commerce, advertising and membership revenue, but investors are demanding stronger evidence that domestic comparable-sales momentum can accelerate again as consumer spending becomes increasingly sensitive to higher fuel costs and household budget pressure.

FAQs

Why did Walmart stock fall after its earnings report?

Walmart stock fell roughly 9% because investors focused on weaker U.S. comparable-sales growth and disappointing third-quarter guidance despite better-than-expected second-quarter revenue and adjusted earnings.

How much did Walmart’s U.S. comparable sales grow?

Walmart U.S. comparable sales excluding fuel increased 2.6% in the second quarter. Excluding health and wellness, comparable sales increased 3.4%.

How did Walmart’s e-commerce business perform?

Walmart’s global e-commerce sales increased 23% during the quarter, while U.S. e-commerce sales grew 24%. Sam’s Club U.S. e-commerce increased 26%.

What is Walmart’s updated full-year guidance?

Walmart expects fiscal-year net sales growth of 4% to 5% and adjusted earnings per share of $2.80 to $2.87, both higher than its previous guidance ranges.

How is Walmart using its tariff refunds?

Walmart said it is eligible for roughly $2.9 billion of tariff refunds and is reinvesting those funds into lower prices and customer experience, particularly across grocery and general merchandise.

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

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