What's Happening?
Walmart's shares fell over 4% following the announcement of its fiscal 2026 second-quarter earnings, which revealed a profit below expectations. The company reported adjusted earnings per share of $0.68, missing the $0.73 forecast by analysts. Despite this, Walmart's revenue increased by nearly 5% year-over-year to $177.40 billion, surpassing the consensus estimate of $175.97 billion. U.S. comparable sales growth was 4.3%, exceeding the projected 4.1%. Global eCommerce sales saw a significant rise of 25%, driven by store-fulfilled pickup and delivery services, as well as marketplace activities. However, operating income decreased by over 8%, impacted by legal and restructuring costs. Walmart's CFO, John David Rainey, noted that tariff-related costs are rising.
Why It's Important?
The mixed results highlight Walmart's ability to drive revenue growth through its eCommerce and in-store services, despite facing challenges in profitability. The increase in eCommerce sales reflects the growing consumer preference for online shopping, which is crucial for Walmart's long-term strategy. The profit shortfall, however, underscores the impact of external factors such as tariffs and legal expenses on the company's financial performance. Investors and stakeholders are closely monitoring these developments, as they could influence Walmart's market position and future profitability.
What's Next?
Walmart has raised its fiscal 2026 outlook for revenue growth and adjusted EPS, indicating confidence in its ability to overcome current challenges. The company expects revenue growth of 3.75% to 4.75% and adjusted EPS of $0.58 to $0.60 for the current quarter, both above consensus estimates. Analysts remain optimistic, with all 12 tracked by Visible Alpha recommending buying Walmart shares. The company will continue to focus on expanding its eCommerce capabilities and managing costs to improve profitability.
