Walmart stock retreated from a buy zone Thursday and fell back to a key moving average. The Dow Jones retailer saw strong traffic and e-commerce growth for its second-quarter results. But the gains weren't enough to offset Walmart's earnings miss and outlook, with tariff impacts expected to increase over the next two quarters. Rival Target tumbled Wednesday following its profit decline and executive shake-up.
Walmart reported a 1.5% increase in earnings to 68 cents per share adjusted for Q2 of its 2026 fiscal year. Revenue rose 4.8% to $177.4 billion.
The adjusted earnings included 5 cent charges related to legal matters and a 1 cent hit from business restructuring charges. It also excluded a 26 cent net gain on equity and other investments.
FactSet expected earnings of 73 cents per share on $175.94 billion in revenue.
Comparable sales rose 4.8%, outpacing analyst views for 4% growth.
CEO Doug McMillon in the release said that Walmart's top-line momentum comes from innovation and execution.
"Connecting with our customers and members through digital experiences is helping to drive our business," he said. "And the way we're deploying AI will make these experiences even better."
Global e-commerce sales jumped 25% during the quarter.
Walmart U.S. sales climbed 4.8% to $120.9 billion. That edged out expectations for $120.06 billion in revenue.
Sam's Club revenue rose 3.4% to $23.6 billion, just below views for $23.93 billion in sales.
Revenue for Walmart's global advertising business spiked 46%, while membership and other income rose 5.4%.
McMillon during the investor call said that Walmart is "keeping our prices as low as we can for as long as we can," and noted that the company increased price rollbacks on 2,000 more items compared to last year.
He added that the company "feels good" about its back-to-school performance, which indicates a "good" holiday season for the retailer.
CFO John Rainey during the earnings call said that Walmart is gaining share amid this period of economic uncertainty, with upper income households contributing the largest gains.
However, executives expect tariff-related costs to increase in Q3 and in Q4. Costs continue to increase as Walmart replenishes inventory at post-tariff price levels.
"As we begin Q3, momentum has persisted and inventory is at a healthy level, up about 4%," Rainey said. He noted that the year-over-year inventory growth is primarily attributable to higher costs for imported goods and the timing of receipts.
"In this tariff-impacted period, we are closely monitoring customer demand and measuring price elasticity of impacted items," he said.
Walmart Raises Outlook
Walmart for its Q3 results expects net sales to increase 3.75% to 4.75% compared to last year, when it recorded $168 billion in revenue. The Dow Jones retailer forecasts earnings between 58 cents and 60 cents per share adjusted, flat from its EPS of 58 cents last year.
FactSet expects Walmart to report Q3 earnings of 57 cents per share adjusted.
Walmart raised its 2026 net sales guidance to range from 3.75% to 4.75% growth. In February, Walmart expected 3% to 4% revenue growth. Walmart also lifted its full-year adjusted earnings outlook by 2 cents, to range from $2.52 to $2.62 per share adjusted.
The top end of the earnings outlook matched FactSet views.
Walmart Stock Slides Early
Walmart stock retreated 4.5% Thursday, to back out of a buy zone for a flat base and fall back to its 50-day line.
Shares broke out above the 100.89 buy point on Aug. 6. The stock had held support above its 21-day exponential moving average ahead of results.
The current buy zone, which stretches 5% beyond the buy point, extends to 105.93.
Walmart stock has advanced about 8.4% this year, about matching the pace of the S&P 500 and making it the 16th best-performer in the Dow in 2025.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
