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Investing.com -- Walmart Inc. reported mixed second-quarter results on Thursday, with revenue exceeding expectations but earnings falling short of analyst estimates. The retail giant also raised its full-year sales and earnings outlook, signaling confidence in its growth trajectory despite near-term challenges.
The company posted adjusted earnings per share of $0.68 for the second quarter, missing the analyst consensus of $0.74. Revenue came in at $177.4 billion, surpassing the $174.4 billion analysts had expected and representing a 4.8% increase YoY, or 5.6% in constant currency. Walmart (NYSE:WMT) shares dropped more than 5% at the open on Thursday following the announcement.
Global eCommerce sales were a bright spot, surging 25% during the quarter, driven by store-fulfilled pickup and delivery services as well as marketplace growth. The company’s advertising business grew 46%, including the recently acquired VIZIO, with Walmart Connect in the U.S. up 31%.
"Our strategic investments in eCommerce and digital capabilities continue to pay off as customers embrace our omnichannel shopping experience," said Doug McMillon, President and CEO of Walmart. "While we faced some headwinds this quarter, our underlying business remains strong."
Operating income decreased 8.2% due to discrete legal and restructuring costs. On an adjusted basis, operating income increased 0.4% in constant currency, though growth was affected by approximately 560 basis points from higher self-insured general liability claims expenses.
Looking ahead, Walmart raised its full-year outlook, now expecting net sales growth of 3.75% to 4.75% in constant currency, up from its previous guidance of 3% to 4%. The company also raised its fiscal 2026 EPS forecast to $2.52-$2.62, though the midpoint of $2.57 remains below the analyst consensus of $2.64.
For the third quarter, Walmart expects EPS of $0.58-$0.60, slightly above the analyst consensus of $0.57.
Analysts at DA Davidson said the results were mixed, "but more good than not," in a note following the release. "EPS did miss this quarter as the expected accounting related benefit from tariff related cost / price increases didn’t materialize. Higher “self-insured general liability claims expense” also hurt the EPS, which while not nothing, to us is not indicative of ongoing business trends," stated the firm.
"The guidance is more good than not as well, with 3Q guided above the street on both sales and EPS," they added.
Morgan Stanley (NYSE:MS) analysts stated that Walmart’s "profit/incremental margin flywheel did not live up to expectations."
"This is entirely due to underwhelming incremental margins/profitability, as top line growth was solid across the board," Morgan Stanley wrote. ". Ultimately, we do not believe anything material will change with the WMT narrative- we remain bullish."
Meanwhile, Jefferies analysts stated: "WMT’s Q2 print highlights strong traffic and price investments driving share gains with U.S. comp growth well ahead of peers."
"Core margin levers remain intact, suggesting continued earnings durability & future upside. While tariffs introduce some near-term uncertainty, the focus on value and market share supports a favorable setup for sustained outperformance."