Walmart Profit Miss Overshadowed by Rising Sales and Market Share Gains

Walmart posted weaker-than-expected quarterly profit but raised its full-year outlook, underscoring resilience in its business model. Sales momentum remains strong as higher-income households shift more spending toward the world’s largest retailer, offsetting margin pressure from tariffs and one-off costs.

Earnings Miss Despite Solid Revenue

Adjusted earnings came in at $0.68 per share, below Wall Street estimates of around $0.73. It marked Walmart’s first profit miss in more than three years. Revenue, however, climbed 4.8% to $177.4 billion, topping expectations and highlighting continued sales strength. Tariffs, legal expenses, and insurance charges weighed on the bottom line.

Affluent Shoppers Expand Market Share

Households earning more than $100,000 a year played an outsized role in Walmart’s gains during the quarter. Their steady spending helped offset weakness from lower-income shoppers facing tighter budgets under higher import costs. This shift in consumer mix is reinforcing Walmart’s ability to pull share from competitors.

Digital Growth Provides Cushion

E-commerce was another bright spot. Online sales in the U.S. rose 26%, while global e-commerce advanced 25%. Advertising revenue surged 46%, and membership income also climbed, giving Walmart a more diversified and higher-margin earnings base that cushions against volatility in traditional retail.

Margins Squeezed by Tariffs

While U.S. gross margins edged higher, overall profitability was flat as tariff-related costs continued to squeeze results. Management pointed to the use of rollback promotions aimed at keeping prices competitive, even as replenishing inventories at higher costs remained a drag.

Guidance Raised Despite Headwinds

Management raised its full-year sales and earnings outlook. Walmart now expects 3.75%–4.75% net sales growth and adjusted EPS of $2.52–$2.62, up from earlier guidance. Third-quarter projections also came in above consensus, signaling confidence that demand will hold up despite ongoing cost pressures.

Tips for Traders

• Track consumer spending trends among higher-income households, a growing driver of Walmart’s market share.

• Watch e-commerce, advertising, and membership revenues as key growth levers beyond store sales.

• Monitor tariff policy and import costs, which remain a risk to margins.

• Follow U.S. comparable sales trends for clues on the durability of consumer demand.

• Look for valuation opportunities in Walmart stock if profit-related dips create attractive entry points.