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Walmart Inc. (WMT)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered steady top-line growth and improved margins: revenue $165.6B (+2.5%; +4.0% cc), gross margin +12 bps to 24.2%, and operating income +4.3% to $7.135B; adjusted EPS was $0.61 and GAAP EPS $0.56 .
  • Beat vs S&P Global consensus: EPS $0.61 vs $0.58 est; revenue $165.6B vs $164.4B est; adjusted EBITDA $10.50B vs $10.35B est*.
  • E-commerce reached profitability at the enterprise and U.S. segment level; global e-commerce +22% and Walmart Connect U.S. +31% supported the P&L mix shift toward higher-margin businesses .
  • Guidance: Q2 FY26 net sales expected +3.5% to +4.5% cc; FY26 guidance unchanged (net sales +3% to +4% cc; adj. operating income +3.5% to +5.5% cc; adj. EPS $2.50–$2.60); WMT withheld Q2 OI/EPS ranges given extreme near-term variability (tariffs, RIM/LIFO) .
  • Capital returns accelerated: $4.6B repurchases (50.4M shares) in Q1 and $7.5B remaining authorization; a notable near-term stock catalyst alongside the milestone of e-commerce profitability and strong ad/membership growth .

What Went Well and What Went Wrong

What Went Well

  • Global e-commerce profitability milestone: “we achieved eCommerce profitability, both in the U.S. as well as for the global enterprise in Q1 for the first time” .
  • Margin and mix improvement in U.S.: gross margin +25 bps on disciplined markdowns, improved business mix (advertising, membership), and better e-commerce economics .
  • Membership/Advertising momentum: global advertising +50% including VIZIO; Walmart Connect U.S. +31%; membership fee income +14.8% globally .

What Went Wrong

  • International margins under pressure: Walmart International operating income declined -17.5% reported (-6.4% cc) amid strategic growth investments and channel/format mix changes; gross profit rate -66 bps .
  • SG&A deleverage: adjusted operating expenses as % of net sales deleveraged +22 bps (reported +6 bps), reflecting depreciation, casualty claims, and wages (partly offset by lapping reorg) .
  • Macro/tariffs create guidance uncertainty: WMT withheld Q2 OI/EPS guidance due to tariff-driven price swings, retail inventory method (RIM) and potential LIFO impacts; CFO noted downside risk if tariffs re-elevate .

Financial Results

Consolidated headline trends (oldest → newest)

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($B)$169.6 $180.6 $165.6
GAAP Diluted EPS ($)$0.57 $0.65 $0.56
Adjusted EPS ($)$0.58 $0.66 $0.61
Operating Income ($B)$6.708 $7.859 $7.135
Gross Margin (%)24.2% 23.9% 24.2%
Adjusted EBITDA Margin (%)——6.4%

Q1 FY26 vs Wall Street consensus (S&P Global)

MetricConsensusActualSurprise
EPS ($)0.58*0.61 +0.03*
Revenue ($B)164.43*165.61 +1.18*
Adjusted EBITDA ($B)10.35*10.50 +0.15*
# EPS Estimates34*——
# Revenue Estimates21*——

Values retrieved from S&P Global.*

Segment breakdown (Q1 FY26)

SegmentNet Sales ($B)Y/YOperating Income ($B)Y/YKey Notes
Walmart U.S.112.2 +3.2% 5.705 +7.0% Comp +4.5%; e-commerce +21%; Connect +31%
International (reported)29.8 -0.3% 1.264 -17.5% Net sales +7.8% cc; e-commerce +20%
Sam’s Club U.S.22.1 +2.9% 0.686 +11.5% Comp ex fuel +6.7%; e-commerce +27%; membership +9.6%

KPIs and operating drivers (Q1 FY26)

KPIValue
Global e-commerce net sales growth+22%
Walmart U.S. comp (ex fuel)+4.5%
Sam’s Club U.S. comp (ex fuel)+6.7%
Walmart U.S. e-commerce contribution to comp~350 bps
Advertising growth (global)+50% (Walmart Connect U.S. +31%)
Membership fee income (global)+14.8%
Expedited deliveries (≤3 hours) share of deliveries~1/3 from stores
Share repurchases$4.6B; 50.4M shares; $90.35 avg price
Inventory ($)$57.5B; +3.8% Y/Y

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (cc)Q2 FY26—+3.5% to +4.5% (incl. ~20 bps tailwind from VIZIO) New (issued)
Operating Income (Q2)Q2 FY26—Withheld; range impractical given variability Withheld
Adjusted EPS (Q2)Q2 FY26—Withheld Withheld
Net Sales (cc)FY26+3.0% to +4.0% (2/20/2025) Unchanged Maintained
Adj. Operating Income (cc)FY26+3.5% to +5.5% (2/20/2025) Unchanged Maintained
Interest, netFY26+$100M to +$200M Unchanged Maintained
Effective Tax RateFY26~23.5% to 24.5% Unchanged Maintained
Adjusted EPSFY26$2.50–$2.60 (incl. ~$0.05 FX headwind) Unchanged Maintained
Capital ExpendituresFY26~3.0%–3.5% of net sales Unchanged Maintained

Earnings Call Themes & Trends

TopicQ3 FY25 (Nov 2024)Q4 FY25 (Feb 2025)Q1 FY26 (May 2025)Trend
eCommerce profitabilityLosses narrowing; delivery densification, expedited delivery uptake Incremental margins ~11%; global penetration 18% Achieved profitability U.S. + enterprise; drivers: density/fees/mix Improving → Milestone
Advertising growth+28% global; Connect U.S. +26% +29% global; Connect U.S. +24%; VIZIO platform added +50% global; Connect U.S. +31%; Flipkart strong Accelerating
Membership+22% income; Sam’s + steady renewal/Plus mix +16% income; Walmart+ and Sam’s China >35% +14.8% global; Sam’s U.S. +9.6% Strong, durable
General MerchandiseDeflation L-SD; units up; seasonal strength L-SD GM comp growth; units rising; holiday strong Slightly negative comps; unit growth; softness in electronics/home Mixed; unit strength vs price deflation
Health & WellnessMid-teens growth; GLP-1 mix pressure Mid-teens growth; GLP-1 ~0.1pt to comp High-teens; >10% script growth ex GLP-1; pharmacy delivery launched Strong; expanding services
Tariffs/macroStorms/port strike noise; stable consumer Stable macro; guidance framed conservatively Tariff-induced variability; RIM/LIFO swings; withheld Q2 OI/EPS ranges Heightened uncertainty
Supply chain automation50% FC volume automated; delivery batch density +20% CapEx 3–3.5%; ROI rising; automation ROI ~20% Continued investment; casualty claims accrual higher Ongoing execution
AI/technologyGenAI personal shopping assistant; My Assistant adoption AI tools save ~4M developer hours; merchant AI Tech-enabled convenience; operating model benefits highlighted Scaling practical deployments

Management Commentary

  • CEO on quarter and omni strategy: “We grew sales 4% and profit by 3% in constant currency… delivery speed continues to help drive our business… we’ll soon reach 95% of the population in the U.S. with delivery options of 3 hours or less” .
  • CFO on guidance stance: “we felt it best to hold from providing a specific range of guidance for operating income growth and EPS for the second quarter… we believe we can navigate well and achieve our full year guidance” .
  • CFO on eCommerce profitability drivers: densification, lower unit delivery costs, and customer willingness to pay for expedited delivery .
  • CFO on tariffs: “if elevated tariffs remain in place for an elongated period, there would be downside risk… the guidance we gave today… is with tariffs at this level… we still think that’s too high” .

Q&A Highlights

  • eCommerce profitability: achieved at U.S. and enterprise levels; drivers include network density, expedited delivery fees, and marketplace/membership/advertising mix .
  • Tariffs and inventory planning: RIM can produce mark-up gains followed by markdown offsets; potential LIFO charges; WMT will manage replenishable goods with suppliers to avoid 2022-style inventory issues .
  • Advertising and VIZIO: Walmart Connect +31%; early integration of VIZIO’s SmartCast expected to broaden ad reach and discovery .
  • Membership traction: Sam’s renewal/Plus penetration rising; Walmart+ adoption aided by pharmacy delivery and fast-fulfillment options .
  • Guidance tone: WMT confident in FY26 targets despite quarter-to-quarter volatility; Q2 OI/EPS ranges withheld due to extreme uncertainty .

Estimates Context

  • Q1 FY26 results exceeded consensus on EPS, revenue, and adjusted EBITDA. Analysts may raise ad/membership contribution forecasts and eCommerce profitability assumptions while embedding more variability in near-term margins (RIM/LIFO dynamics) given tariff pass-through and elasticity uncertainty.
  • S&P Global consensus vs actual (see table above). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix shift toward higher-margin businesses (advertising, membership, marketplace, expedited delivery) is now visibly lifting margins; eCommerce profitability milestone supports a structurally higher earnings trajectory .
  • Near-term earnings volatility is elevated due to tariffs, RIM markup/markdown timing, and potential LIFO; WMT withheld Q2 OI/EPS ranges but reaffirmed FY26, signaling confidence in full-year execution .
  • U.S. core is healthy (comp +4.5%; GM margins up), while International is investing through mix headwinds; watch Walmex cadence and China club growth for International recovery commentary .
  • Strong capital returns and balance sheet capacity: $4.6B buybacks in Q1 and ongoing dividend program; opportunistic repurchases likely on price dislocations .
  • Trading lens: Positive catalysts include eCommerce profitability inflection, ad/membership growth, and potential tariff moderation; risks are tariff persistence and inventory/margin timing effects (RIM/LIFO) across Q2–Q4 .
  • Medium-term thesis: Omni advantages (store proximity, dense last-mile, automation) and tech investments (AI) underpin 4% sales growth with operating income growing faster than sales over the plan horizon .

Document references

  • Q1 FY26 8-K, press release, and earnings presentation .
  • Q1 FY26 earnings press release .
  • Q1 FY26 earnings call transcript .
  • Q3 FY25 press release and call .
  • Q4 FY25 press release and call .