Walmart stock falls after earnings despite higher full-year outlook
Walmart shares closed about 9% lower after U.S. comparable-sales growth and quarterly guidance fell short of investor hopes.
By Daniel Okafor · Business Editor
2 min read
Walmart stock falls earnings was the market’s immediate story on Aug. 20, even as the retailer reported higher revenue and raised its full-year targets. Shares closed about 9% lower, with CNBC reporting that Wall Street appeared disappointed by U.S. comparable-sales growth and the company’s sales outlook.
Walmart reported fiscal second-quarter revenue of $187.9 billion, up 5.9% from a year earlier, and adjusted earnings of 81 cents a share, according to its filing with the Securities and Exchange Commission. U.S. comparable sales, excluding fuel, increased 2.6% for the 13 weeks ended July 31.
Why did Walmart stock fall after earnings?
The 2.6% U.S. comparable-sales increase was below the 3.5% rise expected by Wall Street analysts tracked by FactSet, CNBC reported. The company said health-and-wellness pricing was a drag on that measure: its SEC release described an 80-basis-point headwind, while Walmart management said on its earnings call that pharmacy deflation tied to new maximum-fair-price regulations reduced comparable-sales growth by 125 basis points.
Walmart’s third-quarter forecast also set a lower near-term bar. The company projected constant-currency net-sales growth of 3.0% to 3.75%, adjusted operating-income growth of 2.0% to 4.0%, and adjusted earnings of 62 cents to 64 cents a share, according to the SEC filing.
Walmart’s presentation said the sales outlook includes a headwind of more than 100 basis points because Flipkart’s Big Billion Days promotion is shifting from the third quarter into the fourth quarter. A stock price moves as buyers and sellers respond to available information, as explained in this guide to how the stock market works.
What did Walmart raise in its full-year forecast?
For fiscal 2027, Walmart lifted expected constant-currency net-sales growth to 4.0% to 5.0%, from a prior 3.5% to 4.5% range. It raised its adjusted operating-income growth forecast to 7.0% to 8.5%, from 6.0% to 8.0%, and lifted adjusted earnings guidance to $2.80 to $2.87 a share from $2.75 to $2.85.
The quarter also included growth in several business lines. Walmart said global e-commerce sales rose 23%, global advertising increased 38%, and membership-fee revenue grew 17%.
Tariff refunds helped second-quarter profit. Walmart said adjusted operating-income growth included refunds received during the period, partly offset by price investments; its presentation said the outlook assumes remaining refunds will be directed toward customer-experience and price investments in the second half.
Chief Financial Officer John David Rainey told CNBC that Walmart was eligible for roughly $2.9 billion in tariff refunds and planned to use the funds to lower prices, with the effect expected in the third quarter. That strategy may support shoppers, while the results showed investors were also weighing the pace of U.S. sales growth and the company’s near-term forecasts.
This story draws on original reporting from CNBC.