Walmart Stock Plunges Nearly 10% After Posting Slowest US Sales Growth in Six Years

Walmart reported fiscal second-quarter revenue of $187.9 billion and adjusted EPS of $0.81, beating Wall Street estimates of $186.7 billion and $0.74 respectively, but the headline number that rattled markets was US comparable sales growth of just 2.6% excluding fuel, the weakest reading since 2020 and well below the 3.7% analysts had expected. Management cited two primary drags: lower pharmacy drug prices, which alone created a roughly 125-basis-point headwind to comp sales, and elevated gasoline prices that the CEO said cause shoppers to make trade-offs once pump prices hit $4 a gallon. Despite the sales miss, operating income rose 28.8% year over year, partly because Walmart received a tariff refund benefit in the quarter.

The company is eligible for up to $2.9 billion in tariff refunds but CFO John David Rainey told CNBC it had collected less than $100 million of that total as of the report date, with price reductions funded by those refunds expected to show up in the third quarter. Walmart raised its full-year fiscal 2027 guidance, lifting adjusted EPS to a range of $2.80 to $2.87 from a prior $2.75 to $2.85, and guiding net sales growth in constant currency to 4% to 5%. However, third-quarter adjusted EPS guidance of $0.62 to $0.64 fell short of the $0.68 consensus, and that shortfall, combined with the comp-sales miss, sent shares down roughly 9% to 10%, the stock's worst single-day decline since May 2022 and a drop that erased approximately $80 billion in market capitalization.

Bright spots included 23% global e-commerce growth, 38% growth in the global advertising business, 17% membership fee revenue growth, and Sam's Club US comparable sales of 4.4%. The CEO noted continued market-share gains from higher-income households and said AI shopping assistant Sparky saw a 70% increase in users year over year, with those users spending 40% more per order. Bank of America cut its price target following the results.

The selloff dragged Target down about 1% and Costco about 1.7% to 2.3%, and weighed on broader indexes, with the Dow Jones Industrial Average closing down 637 points, the S&P 500 off 0.7%, and the Nasdaq down 1%, compounded by a simultaneous rise in Treasury yields.