Walmart posted quarterly revenue of $178 billion, beating analyst expectations with a 7.3% year-over-year increase driven by a 26% surge in global eCommerce sales, but the retail giant warned that scaling its digital operations continues to weigh on profit margins.
The world’s largest retailer reported earnings before the opening bell on Thursday, revealing a mixed picture of top-line strength offset by operational cost pressures. Global comparable sales rose 4.8% on a constant currency basis, while Walmart U.S. posted a 4.6% increase in same-store sales driven by grocery and health and wellness categories.
eCommerce Surge Drives Revenue but Compresses Margins
The standout performer was Walmart’s eCommerce division, where global sales jumped 25%, with U.S. store-fulfilled delivery channels growing nearly 50%. Walmart Connect, the company’s advertising platform, saw U.S. revenue climb 31%, while the broader global advertising business grew 46%.
However, the aggressive push into digital fulfillment came at a cost. Operating margins compressed by 8 basis points to 4.3%, reflecting higher fulfillment expenses, rising associate healthcare costs, and $200 million in business reorganization charges. Operating income declined 8.2% to $7.3 billion, though it rose 0.4% on a constant currency basis.
Capital Expenditures Weigh on Cash Flow
Capital expenditure reached $6.7 billion as the company invested heavily in supply chain automation and omnichannel infrastructure. This drove negative free cash flow of $1.9 billion, a deterioration of $2.4 billion compared to the prior year period. Operating cash flow nonetheless increased by $2 billion to $18.4 billion.
We had a solid quarter, and our momentum is strong. – Doug McMillon, Walmart CEO
Internationally, Walmart saw net sales grow 5.5%, or 10.5% on a constant currency basis, led by performance in China, Walmart Mexico, and Flipkart in India. International operating income fell 9.8%, largely due to strategic growth investments in those same markets. The company also repurchased 67.4 million shares year-to-date for approximately $6.2 billion.
Raised Full-Year Outlook
Looking ahead, Walmart raised its full-year net sales growth guidance to 3.75%-4.75% and adjusted EPS forecast to $2.52-$2.62. Third-quarter guidance projects net sales growth of 3.75%-4.75% and operating income growth of 3%-6% on a constant currency basis. The results underscore the tension facing major retailers: consumers are spending, but the cost of meeting them where they are, increasingly online, continues to pressure the bottom line.
Sources: Walmart Inc. Q2 FY2026 earnings release; TradingView; TipRanks; CNBC
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