Dive Brief:
- Walmart's transactions and average ticket grew over 1% year over year for its U.S. business in the second quarter, with e-commerce sales growing 24%. E-commerce sales now represent over 23% of the company’s mix in Walmart U.S. — double what it was from five years ago — CFO John David Rainey said on an earnings call Thursday.
- Stung by maximum fair price regulation on drugs, Walmart U.S. Q2 comps grew 2.6%. Excluding health and wellness, comps grew 3.4%, the retailer disclosed in an earnings presentation Thursday.
- Overall Walmart Inc. revenue grew 5.9% year over year to $187.9 billion and operating income jumped 28.8% to $9.4 billion. The company raised its fiscal year 2027 net sales guidance to be in a range of 4% to 5%, up from the previous 3.5% to 4.5% range.
Dive Insight:
The utility of brick-and-mortar stores continues to shift for one of the largest retailers in the world.
“The role of our stores has evolved as our model has changed,” Rainey said on the call. “The more omni we become, the more important our stores become — not less important, more important. Between in-store shopping and digital fulfillment, we have more unit volumes transacted through our stores than ever before, as they are the last-mile fulfillment nodes for 80% of our e-commerce orders and 100% of our fast deliveries.”
The hit from new maximum fair price regulation in the U.S. was a talking point for industry analysts, though the strength of the overall business still shone through.
“Importantly, we think Walmart continues to operate from a position of strength,” Jefferies analysts said in an emailed note Thursday. “Underlying trends remain supported by transaction growth, broad-based share gains, and continued strength across eCommerce, advertising, marketplace, and membership.”
The U.S. comps were below expectations, but TD Cowen analysts “remain encouraged by [Walmart’s] ability to gain share and grow profits faster than sales,” per a Thursday note.
Tariff refunds also added to some uplift in the retailer’s Q2 results, presenting “some idiosyncrasies,” according to Rainey. Gross profit rate — which jumped 96 basis points — and Walmart’s operating income increase were partly driven by the impact of tariff refunds.
Walmart has received substantially all of the $2.9 billion in tariff refunds it expected it was eligible for to date, the CFO noted.
“Looking forward, our Q3 guidance reflects the continued impact of pricing actions taken in Q2, alongside continued prioritization of tariff refunds in the price investment,” he said on the analyst call. “We would encourage you to look at our operating income growth for Q2 and Q3 together to assess the underlying performance of the business.”
