Earnings Report: Despite Upward Revision of Full-Year Forecast, Walmart's Q2 Comparable Sales Growth Hits Lowest in Over 6 Years, Stock Plunges 9%

U.S. retail giant Walmart (WMT-US) released its fiscal 2027 second-quarter results (through July 31) on Thursday, August 20, reporting revenues and profits above expectations and raising its full-year guidance. However, U.S. comparable-store sales growth fell to its slowest pace in over six years, falling short of market forecasts—an unusual miss that sparked investor worries that rising oil prices and inflation are pressuring consumers to reduce spending.

Walmart’s stock plunged as much as 8.7% at the market open, marking its largest intraday drop since July 2022. At the time of writing, Walmart shares were down 9.29%, temporarily trading at $103.68 per share.

Looking ahead, Walmart raised its full-year net sales growth forecast from 3.5%–4.5% to 4%–5% and increased its adjusted earnings per share (EPS) outlook to $2.80–$2.87. However, its third-quarter EPS forecast of 62 to 64 cents fell below the market expectation of 68 cents, and its revenue growth forecast of 3%–3.75% similarly failed to restore investor confidence.

U.S. Comparable-Store Sales Miss Market Expectations

Walmart’s second-quarter revenue rose 5.9% year-over-year to $187.9 billion, exceeding the market estimate of $186.6 billion. Adjusted EPS came in at 81 cents, also beating the expected 74 cents. However, U.S. comparable-store sales grew by only 2.6%, below the 3.8% projected by LSEG analyst consensus, marking the first miss in at least five years and the slowest growth rate in over six years.

Figure: Walmart Earnings

The primary drag on sales was federal government drug pricing negotiations that lowered prescription drug prices, reducing average transaction values in the pharmacy and healthcare segment. Excluding this impact, U.S. comparable-store sales would have grown by 3.4%, still the slowest pace since the first quarter of fiscal 2023.

Average transaction value growth in the latest quarter was just 1.1%, down sharply from 3.1% in the same period last year. Customer traffic growth also slowed from 3% in Q1 to 1.5%, indicating that while consumers maintain essential spending, they are actively seeking lower-priced goods and making trade-offs on discretionary and other expenses.

CFO John David Rainey noted that gasoline prices exceeding $4 per gallon may have psychological impacts on consumers, with low-income households particularly affected. Walmart now expects fuel-related costs for the fiscal year to exceed $2 billion, higher than previously anticipated.

Price Cuts and E-Commerce Growth Fail to Convince Market

This quarter, Walmart reduced prices on more than 11,000 items—about twice the usual number. The company has received most of the $2.9 billion in tariff refunds it originally expected and reinvested those funds into lowering prices on food and general merchandise, aiming to widen its price gap with rival supermarkets and capture market share.

However, most price reduction measures began only in July, so their short-term impact on customer traffic and sales has been limited. Management expects the benefits of these price investments to become visible in the next quarter.

E-commerce remained a bright spot in the earnings report, with U.S. online sales growing 24% and advertising business Walmart Connect surging 43% in revenue. The number of items eligible for delivery within 30 minutes doubled year-over-year, and approximately 70% of e-commerce orders are now delivered the same day or faster. Still, analysts pointed out that physical stores remain the core of Walmart’s business, and digital and advertising growth alone cannot offset concerns over slowing comparable-store sales.