Walmart Inc Earnings - Q2 2027 Analysis & Highlights
Walmart delivered strong Q2 2027 results with robust eCommerce growth and platform business expansion, while managing tariff refunds strategically through price investments to drive market share gains amid a moderating consumer environment and higher fuel costs.
Key Financial Results
Enterprise net sales growth of 5% in constant currency, at the top end of guidance of 4% to 5%, driven by eCommerce, Sam's Club, and China growth.
Global eCommerce net sales grew 23%, continuing strong momentum with Walmart U.S. achieving its 10th consecutive quarter of growth over 20%.
Adjusted operating income increased over 17% on a constant currency basis, with a net benefit of approximately 750 basis points from tariff refunds received in Q2.
Adjusted EPS increased over 19% on a constant currency basis.
Membership fee revenue reached an all-time high with growth of 17%.
Underlying operating income growth was at the top end of 7% to 10% guidance, excluding tariff refund benefits.
Business Segment Results
Walmart U.S. net sales increased 3.5%, with comp sales ex-fuel of 2.6%, slightly below initial expectations due to lower health and wellness sales impacted by maximum fair pricing headwinds.
Walmart U.S. comp sales of 2.6% were led by transactions and units, with strong sales growth in categories like toys, pantry, and fresh, plus continued growth from higher income households.
Sam's Club U.S. delivered comps of 4.4%, driven by a 7% increase in transactions with solid growth in unit volumes.
International constant currency sales increased nearly 8%, led by 9.7% growth in China.
Walmart U.S. eCommerce grew 24%, with over 40% sales growth in store fulfilled deliveries, 20% growth in average weekly customers, and over 50% growth in marketplace sales.
Sam's Club U.S. eCommerce grew 26%, with delivery from Club up triple digits following the launch of one-hour delivery in April.
International eCommerce grew 19%, led by China, India, and Canada.
Global advertising increased 38%, driven by strong performance from Walmart Connect in the U.S. and Flipkart Ads.
Marketplace net sales in the U.S. grew 52%, with nearly 50% of the marketplace business flowing through Walmart fulfillment services, an increase of nearly 400 basis points versus last year.
Membership income grew nearly 17% globally, with Sam's Club U.S. membership increasing nearly 6% driven by steady growth in member accounts and plus penetration.
Sam's Club China hit new record highs in member counts, and strong relative performance was seen in the Sam's format in Mexico.
Walmart+ program achieved double-digit growth, resulting in the best first half of membership growth in its history.
Health and wellness category was negatively impacted by 125 basis points in Q2 from maximum fair pricing regulation, with deflation and brand to generic transfers.
Capital Allocation
CapEx expected to be approximately 4% of annual net sales, slightly higher than previously expected.
Double-digit growth in free cash flow expected for the year despite increased CapEx.
Tariff refunds of approximately $2.9 billion, amounting to about 0.5% of annual U.S. net sales, have been substantially received and are being invested back into customer experience and price leadership, prioritizing investment in grocery and general merchandise categories.
Industry Trends and Dynamics
eCommerce continues to drive growth, customer spend, and market share gains across all operating segments.
Fast delivery is a significant competitive advantage, with sub-30-minute delivery expanded into 38 markets in the U.S., giving millions of additional customers access to faster fulfillment.
Fast delivery in the U.S. grew 48% for the quarter, with 70% of all eCommerce orders delivered same-day or better.
Customers using fast delivery shop more frequently, deepen engagement, and are more likely to become Walmart+ members.
Walmart is expanding beyond traditional retail categories into food delivery and meal solutions, including partnerships like the one announced with Subway.
eCommerce sales now represent over 23% of Walmart U.S. mix, double the level from just five years ago.
Stores are fulfilling 80% of eCommerce orders and 100% of fast deliveries, making them critical last-mile fulfillment nodes.
Competitive Landscape
Walmart continued to gain market share across the business, with particularly strong share gains in food categories.
Price gaps to conventional grocers in the U.S. are strong and continue to widen, with share gains from this channel persisting alongside drug and dollar formats.
Walmart U.S. delivered more than 11,000 rollbacks during the quarter, up from 7,200 rollbacks at the end of the first quarter, demonstrating commitment to price investment and market share gains.
Members of Walmart+ spend approximately four times more than non-members.
Customers using Sparky AI shopping assistant spend 40% more per order than others who don't use it, with usage up 70% from last year.
Macroeconomic Environment
Customers continue to feel some pressure, but are looking for value and convenience with fast delivery.
Higher fuel prices are impacting consumer behavior, with gas prices peaking above $4 in June creating a psychological impact on consumer choices.
More than $2 billion of incremental fuel-related costs expected this year, above and beyond original guidance assumptions.
Inflation remains low at between 1% and 2% in total, with fuel costs being the primary concern.
Maximum fair pricing regulation for certain drugs negatively impacted comp sales by 125 basis points in Q2, with deflation and brand to generic transfers.
GLP-1 drug sales benefit expected to be roughly half the amount in FY 2027 compared to prior years, as script count growth is more than offset by price/mix headwinds.
Growth Opportunities and Strategies
Platform strategy is strengthening the business and improving economics, with marketplace, fulfillment services, membership, advertising, and other commerce solutions creating scalable capabilities across markets.
Marketplace platform capabilities expanded into Mexico and Canada, and Walmart+ was launched in Canada.
Acquisition of Vibe expands advertising capabilities to help advertisers of all sizes reach customers through self-serve tools while measuring results against real shopping behavior.
Scintilla platform extended to Sam's Club U.S. next year, addressing one of the top requests from suppliers.
Supply chain investments in automation, technology, fulfillment capacity, and physical network are showing up in customer experience, allowing faster delivery, better in-stock levels, and supporting growth of both first-party and marketplace businesses.
AI is being used to make work easier for associates and improve shopping experiences, with Sparky AI demonstrating strong adoption and customer spending increases.
Walmart U.S. eCommerce achieved double-digit incremental margins for the first half of the year, driven by strong ad and membership revenue, delivery network densification, and automation benefits.
3,100 U.S. stores now served with some level of automated freight, with over 50% of eCommerce fulfillment volume processed through automated facilities.
Fee-based fast deliveries represented an all-time high of 37% of store fulfilled deliveries in the quarter.
Walmart is building what it believes can be the most essential membership program for consumers, with continued strong double-digit growth in Walmart+.
Financial Guidance and Outlook
Full year sales guidance raised to 4% to 5% from 3.5% to 4.5% previously, reflecting pass-through of first half performance and assumptions of slightly better second half sales as price investments drive accelerated and sustained share gains.
Full year operating income guidance raised to 7% to 8.5% versus 6% to 8% previously.
Full year EPS guidance raised to $2.80 to $2.87 from $2.75 to $2.85 previously.
Q3 operating income growth on a constant currency basis expected to grow 2% to 4%, with a large portion of tariff refunds invested at the end of Q2 making the full quarter impact more pronounced in Q3.
Q3 EPS expected to be $0.62 to $0.64.
Q2 and Q3 reported operating income together would average approximately 10% growth per quarter.
Enterprise sales growth in Q3 expected to be between 3% and 3.75%, with a headwind of over 100 basis points from lapping Flipkart's Big Billion Days event.
Q4 sales growth expected to benefit by a similar amount from this year's Flipkart Big Billion Days event.
Walmart U.S. sales growth expected to improve in Q3 as investment in customer value translates into stronger sales.
Sam's Club U.S. and International expected to be growth accretive to the enterprise in both Q3 and Q4.
Maximum fair pricing headwind to Walmart U.S. comp sales estimated at 125 basis points for full year FY 2027.
Costs related to acquisition and integration of Vibe expected to be an approximate 20 basis points headwind to operating income growth.
Guidance assumes fuel costs persist at current rates.
Digital and Platform Business Performance
Walmart U.S. eCommerce business achieved double-digit incremental margins for the first half of the year, driven by continued strong ad and membership revenue, further densification of delivery network, growth in fee-based fast deliveries, and benefits of automation.
Incremental margins in digital business are growing at twice the rate of overall business margins, showing how earnings complexion and durability of growth will play into the future.
Advertising growth continues to outpace eCommerce growth by a large margin on a larger base, giving confidence that incremental margins could go higher.
Walmart Data Ventures continues to drive meaningful growth, with users valuing the platform's enhanced decision intelligence capabilities that uncover shared growth opportunities across Walmart's formats and markets.
