Walmart Inc. (NASDAQ: WMT) shares fell sharply after the retailer reported second-quarter earnings that beat estimates but issued third-quarter guidance below Wall Street expectations. U.S. comparable sales growth slowed to its weakest pace since 2020.

The company reported quarterly sales of $187.937 billion, beating the analyst consensus estimate of $186.794 billion by 0.61%. This represents a 5.94% increase over sales of $177.402 billion in the same period last year. Adjusted earnings per share came in at $0.81, surpassing the consensus estimate of $0.74.

Business Performance and Headwinds

Walmart U.S. comparable sales increased 2.6%, driven by higher transactions. This marks the retailer’s smallest quarterly increase since 2020. Pharmacy deflation tied to new maximum fair price regulations, which took effect January 1, created a 125-basis-point headwind to comparable sales. Walmart expects a similar headwind for fiscal 2027.

DA Davidson analyst Michael Baker noted that the slowdown was mainly due to incremental weakness among low-income consumers driven by higher gas prices. Excluding Health & Wellness, US comps improved 3.4%, while core merchandise categories remained in the 3%-4% range, BTIG analyst Robert Drbul stated.

Sam’s Club U.S. comparable sales climbed 4.4%, supported by 7% transaction growth. International sales rose nearly 8% in constant currency, led by 9.7% growth in China. E-commerce now represents more than 23% of Walmart U.S. sales, with stores fulfilling about 80% of e-commerce orders and all fast deliveries.

Global e-commerce sales grew 23%. Global advertising revenue increased 38%, while global membership fee revenue rose 17% during the quarter.

AI Strategy and Sparky Growth

CEO John Furner highlighted the company’s push to integrate artificial intelligence into shopping and operations. Customers using Walmart’s AI assistant, Sparky, spend 40% more per order than those who do not use it. The number of Sparky users increased 70% year-over-year.

Furner noted that Sparky helps personalize shopping, such as generating meal plans and recognizing previously purchased ingredients to avoid duplicates. In one example, a customer asked for a weekly high-protein meal plan, and Sparky returned recipes and meal kits for one-click addition to the cart. The tool is also central to advertising ambitions, with tests of “Sponsored Prompt” ads inside the chatbot and a partnership with OpenAI to allow ChatGPT users to buy Walmart products directly. This strategy mirrors rival Amazon.com Inc.’s (NASDAQ: AMZN) push into Sponsored Prompts inside its own AI assistant, Rufus. Furner stated that AI will improve nearly every part of the business.

Financial Metrics and Balance Sheet

Operating income expanded significantly, rising 28.8% (or 17.4% adjusted in constant currency). This growth was primarily impacted by tariff refund impacts received during the quarter, which added about 750 basis points to operating income growth. These refunds were partially offset by price investments. Gross profit rate improved by 96 basis points to 25.4%.

Operating cash flow increased $1.4 billion to $19.7 billion. However, free cash flow declined $1.4 billion to $5.5 billion. The company repurchased 42.3 million shares for $5.1 billion year to date. Global inventory increased 6.3% year-over-year to $61.6 billion.

Guidance and Outlook

During the conference call, executives confirmed that the company rolled back prices on 11,000 items in the United States during the second quarter. The annual forecast assumes slightly stronger second-half sales than previously expected, driven by price investments, with fuel prices and tariffs remaining at current levels.

Walmart raised its fiscal 2027 adjusted EPS outlook to $2.80-$2.87 from $2.75-$2.85, though this remains below the consensus estimate of $2.90. The company also raised its fiscal 2027 sales outlook to $734.656 billion-$741.720 billion from $731.124 billion-$738.188 billion, missing the consensus estimate of $752.250 billion.

For the third quarter, Walmart expects adjusted EPS of 62 cents-64 cents, below the 68-cent estimate. It forecasts sales of $183.134 billion-$184.468 billion, compared with the $188.339 billion estimate. The timing of Flipkart’s Big Billion Days is expected to reduce third-quarter sales growth by more than 100 basis points. Additionally, the Vibe acquisition and integration is expected to create a 20-basis-point operating income headwind. Walmart expects more than $2 billion in additional fuel costs this year.

JPMorgan analyst Christopher Horvers noted that the trend is likely to improve due to a later back-to-school season, with the biggest weeks still to come. He stated that price investments are likely to drive better volumes and believes buy-side estimates will move up, not down.

Market Reaction and Analyst Revisions

Shares fell around 10% on Thursday after the retail giant reported second-quarter results and issued third-quarter guidance below estimates. At around $104.23, Walmart was down 8.81% at the time of publication. The stock closed at $103.59, down 9.15%, and gained 0.35% in pre-market trading on Friday. Shares slid further in early trading on Friday, declining 0.90% to $102.66. The stock is now trading below its 20-day SMA ($112.24), 50-day SMA ($114.42), 100-day SMA ($120.22), and 200-day SMA ($118.38).

Options markets signal substantial volatility. Walmart faces a 4.50% implied move, with $41.4 billion of market value at stake.

Broader market sentiment weighed on the stock. U.S. stocks traded lower midway through trading, with the Nasdaq Composite falling over 200 points on Thursday. The Dow traded down 0.84% to 53,015.12 while the NASDAQ fell 0.87% to 26,100.76. The S&P 500 also fell, dropping 0.41% to 7,676.76. Consumer staples stocks fell by 1.8%, while energy shares jumped by 1.5%.

Following the earnings announcement, several analysts revised their price targets downward:

• JPMorgan analyst Christopher Horvers reiterated an Overweight rating, slashing the price target from $137 to $125.
• Guggenheim Securities analyst John Heinbockel maintained a Buy rating, cutting the price target from $135 to $130.
• RBC Capital Markets analyst Steven Shemesh reiterated an Outperform rating, trimming the price target from $137 to $131.
• DA Davidson analyst Michael Baker reaffirmed a Buy rating, slashing the price target from $150 to $132.
• BTIG analyst Robert Drbul maintained a Buy rating, reducing the price target from $145 to $140.
• Baird analyst Peter Benedict maintained an Outperform rating, cutting the price target from $140 to $120.

Heinbockel described the combination of temporarily slowing sales and the stock’s premium valuation as a "tough combo," noting that the market’s adverse reaction to known headwinds was surprising. Shemesh highlighted that constant currency operating income excluding the IEEPA tariff refund grew around 9.8%, driven by high-margin businesses such as membership, advertising, and marketplace.

What the Numbers Show

The data reveals a sharp divergence between operational efficiency and top-line momentum. While gross margins expanded by 96 basis points to 25.4%—bolstered significantly by one-time tariff refunds which added 750 basis points to operating income growth—underlying sales growth has decelerated to its lowest level since 2020. The 125-basis-point headwind from pharmacy regulations highlights regulatory pressure on high-volume categories. Furthermore, the decline in free cash flow to $5.5 billion, despite a rise in operating cash flow to $19.7 billion, suggests that capital expenditures or working capital changes are absorbing the liquidity generated from operations. The guidance miss on both EPS and sales indicates that management sees these headwinds persisting into the next quarter. Meanwhile, the strong adoption metrics for Sparky suggest AI initiatives are gaining traction as a potential driver for future basket size growth.

Walmart Inc. (NASDAQ: WMT) opened its 100th company-owned electric vehicle fast-charging site at a Supercenter in Monument, Colorado. This milestone marks the expansion of its proprietary charging network across 20 states, integrating energy infrastructure with its retail footprint.

The new location, situated at 16218 Jackson Creek Parkway, features chargers capable of delivering up to 400 kW of power. Each site typically includes 8 to 16 stalls equipped with both CCS and NACS connectors, ensuring compatibility with most electric vehicles currently on the road.

Network Expansion Strategy

Walmart is building this network to provide dependable charging at locations where customers already shop. The company aims to make charging accessible while expanding service offerings for its customer base.

"By expanding EV fast charging at Walmart locations across the country, we’re giving drivers a dependable way to charge while they’re in the store," said Shayne Wahlmeier, Senior Vice President, Walmart Energy. "Reaching 100 sites is an important milestone, and our broad footprint positions us to make EV charging more accessible for communities while expanding the ways we serve our customers."

Customer Experience and Technology

The charging infrastructure is designed to be integrated into the Walmart app, allowing customers to start and pay for sessions digitally. Charging stalls are located steps from store entrances to facilitate shopping during charge times.

Adam Happel, General Manager, Walmart Retail EV Charging, noted that the focus remains on reliability. "When a customer pulls into a Walmart to charge, we want the experience to feel as reliable and effortless as the rest of their shopping trip," Happel said.

Walmart+ members receive discounted charging rates. The company plans to add additional payment options as the network grows further.

Future Outlook

Walmart will continue expanding its network in markets requiring greater access to convenient fast charging. The retailer is working with local utilities and partners to bring new sites online. Customers can locate current and upcoming stations via the Walmart EV Charging website or major mapping platforms including Apple Maps and Google Maps.