Walmart delivered a stronger-than-expected second quarter, with both revenue and adjusted earnings beating Wall Street estimates. The stock nevertheless plunged as investors focused on slower U.S. comparable sales and a cautious near-term outlook. Shares fell 9.2% on August 20, the biggest one-day decline in more than four years, according to The Wall Street Journal. As the world's largest retailer by revenue, Walmart is widely read as a bellwether for U.S. consumer spending, which is why its results and guidance carry weight well beyond its own share price. (Sources: Zacks, TradingKey)

Revenue rises nearly 6%

Walmart posted second-quarter revenue of about $187.9 billion, up 5.9% year over year. The result topped the Zacks consensus estimate of $186.26 billion, pointing to continued sales momentum despite concerns around consumer spending.

Earnings deliver a solid beat

Adjusted earnings came in at $0.81 per share against the Zacks consensus of $0.73, an earnings surprise of nearly 11%. Adjusted EPS also rose from $0.68 a year earlier.

Why did the stock fall?

The market looked past the headline earnings beat. Walmart's U.S. comparable sales growth slowed to 2.6%, its weakest pace in more than six years, versus Wall Street expectations of around 3.8%. The softer figure raised concerns about the health of the American consumer. Comparable sales — revenue from stores and digital channels operating for at least a year — is the industry's core measure of underlying demand, and because groceries account for roughly 60% of Walmart's U.S. sales, the slowdown extended to household staples rather than discretionary categories alone. Walmart is also typically among the first big U.S. retailers to report each quarter, making the figure an early data point for the broader retail sector.

E-commerce remains a bright spot

The retailer's digital business continued to expand rapidly. Global e-commerce sales increased 23%-24%, advertising revenue jumped 38%, and membership revenue rose 17%. These higher-growth businesses are becoming increasingly important to Walmart's overall growth strategy. Advertising, run through Walmart Connect, and membership, which spans Walmart+ and Sam's Club, are also higher-margin than core merchandise sales, so their rapid growth supports overall profitability as they become a larger share of the mix.

Tariff refund lifts margins, but Walmart plans to reinvest

Walmart benefited from a $2.9 billion tariff refund, which helped lift its gross profit rate and operating income. Management, however, plans to use part of the benefit to keep prices low and invest in price competitiveness, limiting how much of the refund translates into lasting earnings gains. TradingKey highlighted this as one of the factors investors need to watch. Tariff costs have been a moving target for import-heavy retailers, and one-off benefits like refunds can lift a quarter's margins without recurring.

Full-year outlook raised, but near-term guidance disappoints

Walmart raised its full-year FY2027 outlook, targeting 4%-5% sales growth and adjusted EPS of $2.80-$2.87. The company's third-quarter outlook was more cautious, with sales growth projected at roughly 3%-3.75% and adjusted EPS of $0.62-$0.64, below market expectations. The guidance arrives ahead of the holiday quarter, the biggest sales period of the year for U.S. retailers and a key checkpoint for whether U.S. comp growth stabilizes.

The key takeaway

On the headline numbers, Walmart's quarter was not bad: revenue and adjusted earnings beat estimates, e-commerce remained strong, and full-year guidance was raised. Investors, however, appear more concerned about slowing U.S. comparable sales, a cautious consumer, and weaker near-term guidance. The reports ahead will show whether advertising and membership keep scaling as core comps normalize, and how much of the tariff benefit ultimately funds lower prices rather than profit.