Walmart Beat, Raised Guidance, And Got Sold Anyway

$WMT cleared the bar on revenue and earnings, lifted its full-year outlook, and still traded sharply lower. The problem was never the beat. It was where the beat came from.

What Walmart Actually Reported

Walmart closed its fiscal second quarter on July 31, 2026, and delivered total revenue of $187.9 billion, up roughly 6% from $177.4 billion a year ago and ahead of the roughly $186.7 billion Wall Street had penciled in. Adjusted EPS came in at $0.81 against a $0.74 consensus, a 19% jump from $0.68 in the year-ago quarter.

Underneath the headline, the mix story stayed intact. Global eCommerce grew 23%, with US eCommerce up 24% and Sam's Club up 26%. Walmart Connect, the US advertising arm, grew 43% excluding VIZIO. Adjusted operating income rose 17.4% in constant currency, well clear of the top of management's own 7% to 10% guidance range.

Reported net income, however, fell about 9% to $6.37 billion from $7.03 billion, dragged down by investment losses rather than anything operational.

The Number That Broke The Print

US comparable sales grew just 2.6% excluding fuel. Analysts were looking for something closer to 3.7% to 3.8%, and management itself had guided to a stronger trajectory after a 4.1% comp in Q1. On Bloomberg's read, that is the slowest US comp growth Walmart has posted in more than six years.

There is a real mitigating factor: pharmacy. Federal legislation capping what pharmacies can charge for certain high-cost Medicare drugs hit the wellness category directly. Strip wellness out and comps were 3.4%, which is a materially different picture.

Where The Margin Came From

This is the part the market spent the morning arguing about. Walmart was eligible for roughly $2.9 billion in tariff refunds, and CFO John David Rainey has said nearly all of it has now been received. Management is deploying those funds into lower shelf prices, and a large portion was invested right at the end of Q2.

Translation: the operating income beat was flattered by a one-time item, and the cost of spending that item lands in Q3. Rainey said so more or less directly, encouraging investors to look at Q2 and Q3 together rather than in isolation, where reported operating income growth would average roughly 10% per quarter.

Guidance: Raised, But Read The Q3 Line

Full-year EPS guidance moved up to $2.80 to $2.87 from $2.75 to $2.85. That is a raise at the halfway mark, and management framed it as confidence in sustaining share gains. But the Q3 operating income range of 2% to 4% is the softest quarterly guide in a while, and it sits alongside two acknowledged headwinds: more than $2 billion in incremental fuel-related costs above the original plan, and roughly 20 basis points of operating income pressure from the Vibe acquisition and its integration.

The Trade

Shares dropped around 6% before the open and extended losses through the session, at one point trading near $104 for a decline approaching 9%. Options markets had priced a move of about 4.5% in either direction. The actual move roughly doubled it.

• Bull case: eCommerce at +23%, advertising at +43%, and membership income compounding are structurally higher-margin. Comps ex-wellness are fine. The price investment funded by tariff refunds buys share in a weak consumer environment.
• Bear case: The beat leaned on a non-recurring refund, the Q3 guide is thin, fuel costs are running $2 billion hot, and the largest retailer in America just posted its slowest US comp in six years against a July retail sales print that fell 0.6% month over month.

Both are true at once, which is exactly why the tape is confused. The resolution comes at the Q3 print, when the price investments are fully absorbed and there is no refund left to smooth the line.

What To Watch Next

• Whether ex-wellness comps hold above 3% once the Medicare drug pricing cap fully laps in.
• Q3 operating income landing at the top of the 2% to 4% range or the bottom.
• General merchandise versus grocery mix, the cleanest read on discretionary demand.
• Fuel costs, now the single largest quantified headwind in the model.