Walmart Earnings: Price Hikes Are Coming
Here's our initial take on Walmart's (NYSE: WMT) financial report.
Key Metrics
Metric | Q1 FY 2025 | Q1 FY 2026 | Change | vs. Expectations |
|---|---|---|---|---|
Revenue | $161.5 billion | $165.6 billion | 2.5% | Beat |
Earnings per share (adjusted) | $0.60 | $0.61 | 1.7% | Beat |
U.S. comparable sales growth (ex. fuel) | 3.8% | 4.5% | 0.7 pp | n/a |
E-commerce growth | 21% | 22% | 1 pp | n/a |
Strong Quarter, but Tariff Impact Is Coming
Walmart reported strong results for the first quarter of fiscal 2026, beating analyst estimates for revenue and earnings while maintaining its outlook for the full year. However, the company warned that the impact of U.S. tariffs would force it to raise prices toward the end of May, which could have a negative impact on sales.
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Walmart's total revenue grew by 2.5% year over year in the first quarter, or by 4% adjusted for currency. Global e-commerce sales were up 22%, while global advertising sales soared 50%, partly due to the acquisition of VIZIO. Sales in the U.S. were up 3.2% on comparable sales growth of 4.5%, and sales in international markets declined slightly. In the Sam's Club segment, comparable sales growth of 6.7% drove overall sales growth of 2.9%.
For the second quarter, Walmart expects its revenue to rise by between 3.5% and 4.5% year over year. The company provided a guidance range due to uncertainty related to tariffs, and it didn't issue guidance for earnings for the same reason. For the full year, Walmart reiterated its guidance, which calls for revenue growth between 3% and 4% and adjusted EPS between $2.50 and $2.60.
Walmart maintained its outlook despite the fact that the company will have to raise prices in response to tariffs. Walmart CFO John Rainey noted that the magnitude of U.S. tariffs was more than any retailer or supplier can absorb. Higher prices will become more noticeable by the end of May, with an uncertain impact on consumer behavior.
Immediate Market Reaction
Shares of Walmart were largely unchanged in premarket trading following the release of the first-quarter report. Walmart beat analyst estimates across the board, and the reiteration of its full-year guidance likely reassured investors to a degree. However, the uncertainty surrounding tariffs and the impact on consumer spending remains high.
What to Watch
Walmart is more able to absorb some tariff impacts than other retailers, and it can pressure suppliers to do the same. The company's scale gives it an advantage over its smaller competitors as it aims to keep prices as low as possible. However, if higher prices from tariffs knock down consumer spending and ultimately lead to an economic slowdown, Walmart won't be immune and may have trouble hitting its full-year outlook. The picture will become more clear a few months from now when Walmart reports its second-quarter results.
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
