Key Takeaways
- Q1 US comparable sales increased 4.1%, marking the weakest performance in a two-year period
- The retailer’s Q2 adjusted EPS forecast of 72–74 cents missed analyst expectations of 75 cents
- Overall revenue climbed 7.3% to reach $177.75 billion, surpassing projections
- Advertising business surged 37% while digital commerce sales advanced 26%
- Competitor Target delivered 5.6% comparable sales growth and upgraded its annual profit forecast
Walmart (WMT) stock experienced a decline of approximately 2.6% during Thursday’s premarket session following the retailer’s disclosure of its most sluggish comparable sales expansion in two years alongside profit projections that disappointed Wall Street analysts.
Shares of WMT were down roughly 2.5% in early Thursday trading.
The company’s US comparable sales metric — a critical indicator within the retail sector — advanced 4.1% during the fiscal period concluded April 30. While this figure aligned with analyst projections, it represented a deceleration from the previous quarter’s 4.6% expansion and marked the softest performance since the first quarter of 2024.
Customer transactions increased 3% while the average purchase amount grew 1.1%.
The metric that particularly disappointed market participants was the second-quarter earnings projection. Walmart provided adjusted EPS guidance ranging from 72 to 74 cents, falling beneath the FactSet consensus estimate of 75 cents.
Regarding full-year expectations, the retailer maintained its previously established guidance of $2.75 to $2.85 adjusted EPS — the identical “conservative” projection introduced in February.
Breaking Down Walmart’s Financial Performance
Quarterly revenue totaled $177.75 billion, representing a 7.3% year-over-year increase and exceeding the consensus forecast of $174.89 billion.
Net earnings rose 18.8% to $5.33 billion. The company’s adjusted EPS of 66 cents precisely matched Wall Street estimates.
Sam’s Club delivered comparable sales growth of 3.9%, topping the 3.3% estimate. Customer transactions climbed 6.2%, while the average transaction amount declined 2.2%.
The most impressive results emerged from higher-margin segments. The advertising division expanded 37%. Digital commerce sales soared 26%. Revenue from membership fees increased 17.4%.
Elevated fuel expenses impacted operating income by approximately 250 basis points during Q1. The company indicated it attempted to absorb these costs internally to maintain competitive pricing for customers.
Despite these headwinds, US gross profit margin expanded by 29 basis points, supported by gains in membership and advertising revenue.
Target’s Performance Amplifies Scrutiny
The report’s timing proved unfavorable. One day prior, Target announced comparable sales growth of 5.6% — its strongest performance in four years — and elevated its annual profit outlook to the upper end of its guidance range.
This direct competitive comparison intensified scrutiny of Walmart’s results, even in areas where the company exceeded revenue expectations.
CEO John Furner stated the results demonstrate “continued focus on delivering across the enterprise — better shopping experiences, a broader assortment, and faster delivery.”
The retailer also emphasized that it captured significant market share during the quarter, with affluent consumers increasingly selecting Walmart for convenience offerings and delivery capabilities.
WMT stock had appreciated 17.5% year-to-date through Wednesday’s close. Target has advanced 25.2% during the identical timeframe.
The company anticipates Q2 net sales growth between 4% and 5%, compared with analyst projections of 5.09%.
