Walmart (NYSE: WMT) reported better-than-expected revenue and adjusted earnings for its fiscal second quarter, yet shares tumbled more than 7% in premarket trading as U.S. comparable sales fell well short of Wall Street's forecasts. The mixed results highlight growing investor concerns about valuation and a more cautious consumer.
Earnings beat, but comps disappoint
For the quarter ended July 31, Walmart posted revenue of $187.9 billion, up nearly 6% year over year and ahead of the roughly $186 billion analysts had projected, according to Bloomberg consensus data. Adjusted earnings per share came in at 81 cents, beating the 74-cent consensus.
However, U.S. comparable sales rose just 2.6%, significantly below the 3.8% increase analysts expected, per LSEG data. The miss was driven by slower customer activity: average ticket growth of 1.1% matched the prior quarter but was down sharply from 3.1% in the second quarter of fiscal 2026, while transactions increased 1.5% versus 3% in the first quarter.
The figures suggest that while Walmart continues to attract shoppers, they are spending less per visit—a sign that consumer caution may be intensifying.
Pharmacy headwinds weigh on sales
Part of the weakness came from Walmart's health and wellness business, where comparable sales declined in the low single digits. The company attributed the drop to a roughly 900-basis-point impact from the implementation of maximum fair price provisions under the Inflation Reduction Act, which allows Medicare to negotiate prices for certain prescription drugs.
Excluding health and wellness, core merchandise comparable sales increased 3.4%. Still, the pharmacy drag has become a growing concern. Earlier this month, Oppenheimer downgraded Walmart to Perform from Outperform and removed its $140 price target, citing potential pharmacy-related pressure on U.S. comps. The firm also described Walmart's valuation as "peakish," warning that a slowdown in comparable sales could leave shares vulnerable to a lower multiple.
Globalt Investments portfolio manager Keith Buchanan echoed that sentiment on CNBC, calling WMT shares a "valuation concern" heading into the print.
Full-year outlook raised, but Q3 guidance soft
Despite the weaker U.S. sales performance, Walmart raised its full-year guidance. The company now expects fiscal 2027 net sales to rise between 4% and 5%, up from its prior forecast of 3.5% to 4.5%. It also lifted its adjusted EPS outlook to $2.80–$2.87 from $2.75–$2.85.
However, the third-quarter outlook was more cautious. Walmart guided to adjusted EPS of 62–64 cents, below the 68-cent analyst estimate, and net sales growth of 3%–3.75%, also under the 4.9% consensus. This suggests management is preparing for a more challenging near-term environment.
E-commerce and advertising remain bright spots
Walmart continues to benefit from businesses outside its traditional store operations. E-commerce sales jumped 24%, while Walmart Connect, its U.S. advertising business, grew 43%. The company has also lowered prices on more than 7,000 items this year, using higher-margin revenue streams like advertising and its third-party marketplace to protect profitability.
Operating income rose roughly 21% year over year, and gross profit expanded 158 basis points. Walmart said the improvement was partly driven by tariff refunds, though price investments and higher fuel costs offset some of the benefit. Adjusted operating income included a 750-basis-point boost from those refunds.
Consumer spending becomes the key question
Grocery remained Walmart's strongest merchandising category, with mid-single-digit growth, while general merchandise—including toys and apparel—grew in the low single digits. But the weaker traffic and ticket figures are likely to keep investors focused on whether Walmart can sustain momentum if consumers become more cautious.
The decision to raise the annual outlook signals confidence in the broader business, but the softer Q3 guidance suggests the company is bracing for a tougher stretch. For investors, the immediate question is whether Walmart's growing e-commerce, advertising, and marketplace operations can offset slower store-based spending and rising costs.
With the stock swinging sharply on the mixed results, many traders are likely to keep a close eye on WMT in the sessions ahead. For context on how other retail giants are navigating similar pressures, see our coverage of Estée Lauder's recent earnings beat and Klarna's guidance-driven slide.
This article is for informational purposes only and does not constitute financial advice.
