Walmart shares plunged more than 9% on Thursday despite the retail giant beating Wall Street’s quarterly revenue estimates and raising its full-year outlook.
Walmart reported fiscal second-quarter revenue of $187.9 billion, up from $177.40 billion a year earlier and above the $186.77 billion expected by analysts surveyed by LSEG. Adjusted earnings came in at 81 cents per share.
(Source: Walmart)
Revenue increased 5.9% during the quarter, while global e-commerce sales jumped 23%. Walmart’s advertising business was another standout, with global advertising revenue rising 38%.
However, investors focused on weaker comparable sales in Walmart’s core US business. Comparable sales increased just 2.6%, below Wall Street expectations and was Walmart’s slowest quarterly comparable sales growth in six years. Excluding the impact of lower negotiated pharmacy prices, comparable sales would have risen 3.4%.
Walmart stock suffers biggest drop since 2022
Walmart stock fell as much as 10% during Thursday’s session, touching a nine-month low of $102.85 before closing more than 9% lower. The selloff erased over $80 billion from Walmart’s market value and was its biggest one-day decline since May of 2022.
Walmart stock price (Source: Google Finance)
Signs of consumer pressure were evident beneath the headline numbers. Walmart store traffic growth slowed to 1.5% from 3% in the previous quarter, while average spending per transaction rose only 1.1%, compared with 3.1% a year earlier.
CFO John David Rainey said higher gasoline prices are forcing some consumers to make trade-offs. Walmart now expects more than $2 billion in additional fuel-related costs this year.
The retailer is responding aggressively on pricing. Walmart plans price reductions across roughly 11,000 products, partly funded by approximately $2.9 billion in tariff refunds. Management said the impact of those lower prices should become more visible during the third quarter.
Walmart raises 2027 outlook
Despite the slowdown, Walmart raised its fiscal 2027 net sales growth forecast to between 4% and 5%, up from 3.5% to 4.5%. Adjusted earnings are now expected between $2.80 and $2.87 per share.
For the third quarter, however, Walmart forecast adjusted earnings of 62 cents to 64 cents per share, which is below the roughly 68 cents analysts had expected.
US e-commerce sales rose 24%, Walmart Connect advertising revenue climbed 43%, and the company doubled the number of items delivered to customers in under 30 minutes compared with a year earlier.
Those faster-growing, higher-margin businesses could become very important as Walmart tries to keep prices low while consumers contend with elevated food and fuel costs.
