Walmart US Sales Growth Weakest Since 2020, Q3 Guidance Misses Estimates

Walmart Inc. shares fell on Thursday as the retailer's US sales growth slowed to its weakest level since 2020. The company also issued third-quarter guidance below Wall Street expectations.

For the third quarter, the company expects adjusted earnings per share of 62 cents to 64 cents, below the 68-cent estimate. Sales are expected at $183.34 billion to $184.468 billion, versus the $188.339 billion estimate.

Walmart Earnings Beat Estimates

The company reported adjusted earnings per share of 81 cents, beating the consensus estimate of 74 cents. Sales reached $187.9 billion, exceeding the $186.8 billion estimate.

Global e-commerce sales grew 23%. Walmart US grew 24%, Sam's Club US grew 26%, and international operations grew 19%.

Walmart US net sales grew 3.5%, with comparable sales up 2.6%. Sam's Club US comparable sales grew 4.4%, supported by a 7% increase in transactions.

The highest fair price regulations reduced Walmart US second-quarter comparable sales by approximately 125 basis points. Walmart expects similar headwinds in fiscal 2027.

E-commerce now accounts for over 23% of Walmart US sales. Stores fulfill approximately 80% of e-commerce orders and all rapid delivery orders.

International sales grew nearly 8% in constant currency, led by China's 9.7% growth.

Enterprise adjusted operating income grew over 17% in constant currency. Tariff refunds contributed approximately 750 basis points to operating income growth.

11,000 Items Priced Lower

During the earnings call, Walmart executives said the company lowered prices on 11,000 US items in the second quarter. The retailer also continued to gain business from higher-income households.

The initiative began in late July. Management said it is satisfied with the start of the back-to-school season.

Walmart's guidance assumes fuel prices and tariffs remain at current levels. The annual outlook also assumes slightly stronger sales in the second half versus prior expectations, supported by price investment.

Walmart Raises Full-Year Guidance But Still Below Wall Street

Walmart raised its fiscal 2027 adjusted earnings per share guidance from $2.75-$2.85 to $2.80-$2.87. The consensus estimate is $2.90.

The company also raised its fiscal 2027 sales guidance from $731.124 billion-$738.188 billion to $734.656 billion-$741.720 billion. Wall Street expected $752.250 billion.

The company expects to face over $2 billion in additional fuel costs this year. The Vibe acquisition and integration is expected to create a 20-basis-point operating income headwind.

The timing of Flipkart Big Billion Days is expected to reduce third-quarter sales growth by over 100 basis points. Walmart expects similar benefits in the fourth quarter.

The company expects Sam's Club US and international operations to continue contributing to enterprise sales growth in both quarters.

Walmart is eligible for approximately $2.9 billion in refunds and has received most of the funds. The retailer is reinvesting most of the proceeds into price cuts and customer experience.

WMT price action: At Thursday's release, Walmart shares fell 8.81% to $104.23.