Walmart Q2 Earnings Miss Estimates but Sales Beat, FY26 View Lifted

Core Insights - Walmart Inc. reported second-quarter fiscal 2026 results, with total revenues of $177.4 billion, exceeding the Zacks Consensus Estimate of $175.5 billion, while adjusted earnings per share (EPS) of 68 cents missed the estimate of 73 cents [1][3][11] - The company raised its fiscal 2026 net sales and adjusted EPS guidance, now expecting net sales growth of 3.75-4.75% and adjusted EPS in the range of $2.52-$2.62 [1][17] Financial Performance - Total revenues increased by 4.8% year over year, with a constant-currency growth of 5.6%, reflecting strong performance across all business segments [3][11] - Adjusted EPS rose 1.5% from the previous year, but fell short of expectations [3][11] - Operating income decreased by 8.2% year over year to $7.3 billion, impacted by legal and restructuring costs, although adjusted operating income increased by 0.4% [7][11] Segment Performance - Walmart U.S. segment net sales grew 4.8% to $120.9 billion, driven by grocery and health & wellness sales, with e-commerce sales rising 26% [8][9] - Walmart International segment net sales increased by 5.5% to $31.2 billion, with a 10.5% increase on a constant-currency basis, supported by strong performance in China and Flipkart [10][11] - Sam's Club U.S. segment net sales rose 6% to $21.2 billion, with e-commerce sales increasing by 26% [12][13] E-commerce and Digital Growth - Global e-commerce sales surged 25%, attributed to store-fulfilled pickup and delivery services [4][11] - Membership income increased by 15.3% globally, while advertising revenue advanced by 46% [4][11] Operating Metrics - Consolidated gross profit margin expanded by 4 basis points to 24.5%, supported by strong inventory management [5][11] - Operating expenses deleveraged by 64 basis points due to higher self-insured liability claims and technology investments [6][11] Future Outlook - For the third quarter of fiscal 2026, Walmart expects consolidated net sales growth of 3.75-4.75% and operating income growth of 3-6% [16][17] - The company anticipates net interest expenses to increase by $100-$200 million [17]