Walmart Inc. (NYSE:WMT) shares are trading lower in the premarket session on Thursday, after the company reported second-quarter results and raised its annual outlook.
The retail giant reported adjusted earnings per share of 68 cents, missing the analyst consensus estimate of 74 cents.
Quarterly sales of $177.40 billion, up 4.8% year over year, outpaced the Street view of $176.16 billion. Total revenues on a constant currency basis increased 5.6%.
Segments
Walmart reported a 4.6% increase in U.S. comparable sales (excluding fuel), while Sam's Club U.S. comparable sales (excluding fuel) rose 5.9%.
In the Walmart U.S. segment, transactions grew 1.5%, while average ticket rose 3.1%.
In Sam's Club U.S., transactions rose 3.9% and the average ticket grew 2.0%
Also Read: Target’s Q2 Struggles Highlight Amazon, Walmart Competition
Quarter In Detail
Adjusted operating income fell 0.8% year-over-year to $7.87 billion in the quarter under review, lower than $7.940 billion a year ago. The GAAP operating income fell 8.2% year-over-year to $7.29 billion.
Adjusted EBITDA margin slipped 10 basis points to 6.5%. Walmart said the decrease was primarily due to net sales growing faster than adjusted operating income.
The gross margin rate, however, improved by four basis points, primarily driven by Walmart U.S, partially offset by pressure in International. Quarterly margins gained from "continued benefits from strong inventory management in the U.S. and improved business mix; partially offset by merchandise category mix pressure."
Global eCommerce sales surged 25%, primarily driven by store-based pickup, delivery services, and marketplace growth.
The company's global advertising segment expanded by 46%, bolstered by contributions from VIZIO.
In the U.S., Walmart Connect recorded a 31% increase, reflecting strong momentum in its retail media operations.
Membership and other income rose 5.4%, supported by a 15.3% increase in global membership income.
Walmart exited the quarter with cash and equivalents worth $9.431 billion, higher than $8.811 billion a year ago.
Outlook
Walmart raised its fiscal year 2026 adjusted earnings per share guidance to $2.52–$2.62 from the prior $2.50–$2.60, compared to the $2.62 analyst estimate.
It raised the annual revenue growth outlook (in constant currency) to 3.75% to 4.75% year over year, translating to an increase from $694.735 billion to $701.480 billion (prior outlook) to $703.151 billion to $709.928 billion versus the $706.209 billion consensus.
Walmart projects that the third quarter adjusted earnings per share will range from 58 to 60 cents, above the 57 cents estimate. The company expects constant currency sales between $175.95 billion and $177.64 billion, compared to the $176.33 billion estimate.
However, the retailer cautioned that there would be approximately a 140-bps headwind from the VIZIO acquisition.
Conference Call
Walmart's CEO reportedly said the company is seeing its costs increase week after week as it replenishes inventory at post-tariff price levels.
He added that tariff-related costs are expected to rise further into the third and fourth quarters.
He also noted that middle and lower income customers are making more adjustments than higher-income shoppers in discretionary categories where prices have climbed.
During the conference call, Walmart's CFO reportedly said the company is closely monitoring customer demand and adjusting purchasing quantities as it gauges the price elasticity of tariff-impacted items.
Watch the live coverage of the Walmart conference call here
Price Action: WMT shares are trading lower by 3.16% to $99.33 premarket at last check Thursday.
Read This Next:
Photo via Shutterstock
