Walmart Shares Hit As Q2 Profit Misses Street, Updates FY26 Outlook Below View

(RTTNews) - Shares of Walmart Inc. were losing around 5 percent in the morning trading after the retail behemoth reported second-quarter earnings below market estimates, despite a significant year-over-year growth. Meanwhile, net sales were higher and beat the Street estimates.

Further, the company issued third-quarter earnings guidance above the Street view. It also improved fiscal 2026 outlook, but below the consensus.

Doug McMillon, President and CEO, Walmart, said, "The top-line momentum we have in our business comes from how we're innovating and executing. Connecting with our customers and members through digital experiences is helping to drive our business, and the way we're deploying AI will make these experiences even better."

Outlook

Looking ahead for the third quarter, the company projects adjusted earnings per share of $0.58 to $0.60 and operating income of $6.7 billion, a growth of 3 percent to 6 percent from last year in constant curreny rates.

The Wall Street analysts on average expect the company to report earnings of $0.57 per share. Analysts' estimates typically exclude special items.

Net sales are expected to increase 3.75 percent to 4.75 percent year-over-year in constant currency from prior year's $168.0 billion.

Analysts expect sales of $174.2 billion, a growth of 3.69 percent from last year.

Further, for fiscal 2026, the company now expects adjusted earnings per share of $2.52 to $2.62, higher than previously expected $2.50 to $2.60. The prior year's adjusted earnings per share were $2.51.

Analysts expect $2.64 per share in earnings for the year.

Net sales are now expected to increased 3.75 percent to 4.75 percent in constant currency from prior year's $674.5 billion. The previous outlook was a growth of 3 percent to 4 percent.

Analysts project sales of $699.27 billion for the year, an year-over-year growth of 3.67 percent.

Adjusted operating income guidance remains unchanged at a growth of 3.5 percent to 5.5 percent in CC.

Q2 Result

In the second quarter, Consolidated net income attributable to Walmart climbed 56.1 percent to $7.03 billion from last year's $4.50 billion. Earnings per share grew 57.1 percent to $0.88 from $0.56 a year ago.

Adjusted earnings were $0.68 per share for the period, compared to $0.67 last year. Analysts on average had expected the company to earn $0.74 per share.

Operating income, meanwhile, decreased 8.2 percent year-over-year to $7.29 billion, affected by discrete legal & restructuring costs.

The company's revenue for the period rose 4.8 percent to $177.40 billion from $169.34 billion last year. The growth was 5.6 percent in constant currency.

Net sales increased 4.8 percent to $175.75 billion from $167.77 billion a year ago. The Street expected sales of $174.38 billion.

In the quarter, global eCommerce sales grew 25 percent, led by store-fulfilled pickup & delivery and marketplace.

Global advertising business climbed 46 percent, including VIZIO. Walmart Connect in the U.S. recorded 31 percent growth.

Walmart U.S. net sales grew 4.8 percent year-over-year to $120.9 billion, and comp sales increased 4.6 percent, compared to 4.2 percent rise last year, with strong growth in grocery and health & wellness.

Walmart International net sales grew 5.5 percent from last year to $31.2 billion. Net sales grew 10.5 percent in constant currency, led by China, Walmex, and Flipkart.

In the pre-market activity on the NYSE- Nasdaq, Walmart shares were losing around 5 percent to trade at $97.38.

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