Walmart beats Street on Q2 sales, misses on earnings; tariffs hit costs
Walmart Inc. reported another strong quarter and rose its full-year guidance even as tariffs are increasing some costs.
On the company's earnings call, Walmart CEO Doug McMillon told analysts that the gradual rollout of tariffs has "muted" customer behavioral adjustments, and added that the company is seeing costs rise each week as it replenishes inventory with tariffs added. McMillon expects tariffs will continue to elevate the cost of inventory into the third and fourth quarters, and said the company would keep its prices as low as it can "for as long as we can."
Walmart's net income rose to $7.03 billion, or $0.88 per share, in the quarter ended July 31, compared with $4.50 billion, or $0.56 per share, in the year-ago quarter. Adjusted earnings were $0.68 per share, short of analyst estimates of $0.74.
Total revenue grew 4.8% to $177.4 billion, ahead of the $176.16 billion projected by Wall Street. E-commerce sales were a continuing bright point, growing 26% in the U.S. and 25% globally, led by store-fulfilled pickup & delivery and marketplace. This marked the 13th straight quarter of double-digit annual e-commerce growth.
Comparable sales excluding fuel rose 4.6%, with strong growth in grocery and health & wellness, compared to a 4.2% increase in the prior year quarter.
Customer transactions rose 1.5% year-over-year and average ticket increased 3.1% in the U.S.
In the international segment, net sales rose 5.5% year over year to $31.2 billion from $29.6 billion, led by China, Walmex (Mexico) and Flipkart (India). Transaction counts and unit volumes were up across markets.
In the Sam’s Club membership warehouse segment, net sales rose 3% to $23.64 billion from $22.85 billion. Comparable sales without fuel increased 5.9%, compared to a 5.2% hike in the second quarter of fiscal 2025.
"The top-line momentum we have in our business comes from how we’re innovating and executing," McMillon, stated in the earnings release. "Connecting with our customers and members through digital experiences is helping to drive our business, and the way we’re deploying AI will make these experiences even better. We’re people-led and tech-powered, and I love how our associates continue to drive change and results for our company."
[READ MORE: Walmart taps Instacart exec to head up AI efforts; rolling out AI ‘super agents’]
In an interview with CNBC, Walmart CFO John David Rainey said one tactic Walmart has been using is acquiring inventory early, especially holiday merchandise to be sold at its Sam’s Club banner. However, he said the retailer is managing its response to tariffs on an item-by-item and category-by-category basis.
"There are certainly areas where we have fully absorbed the impact of higher tariff costs," said Rainey. "There are other areas where we’ve had to pass some of those costs along."
Rainey previously told CNBC that Walmart imports about one-third of the merchandise it sells, with China, Mexico, Canada, Vietnam and India supplying a majority of imported goods.
Guidance
Looking ahead, Walmart issues guidance for the third quarter with net sales expected to increase 3.75% to 4.75%. The Company is also raising the quarterly outlook for net sales growth to 3.75% to 4.75% and adjusted earnings per share to $2.52 to $2.62 for fiscal year 2026.
Based in Bentonville, Ark., Walmart operates 10,750 stores and numerous e-commerce websites in 19 countries.
