Walmart Stock Falls 3% After Q2 Earnings Release

Walmart shares, which goes by WMT ticker on NYSE dipped around 3% in pre-market trading as per Google Finance following the release of its second-quarter fiscal 2026 results on August 21, 2025. Despite robust top-line growth and raised full-year guidance, a rare miss on earnings per share (EPS) disappointed investors and tempered enthusiasm about the retail giant’s outlook. 

Let’s break down Walmart’s June quarter with the help of this blog.

Key Financial Highlights From Walmart’s Earnings Report

Source: Walmart’s June Quarter 2025 Earnings Report

Walmart’s Q2 performance clearly indicates strong top-line momentum, particularly through its omnichannel sales which rose nearly 5% whereas eCommerce surged 25%, and advertising almost doubled. 

However, net profitability was weighed down by one-time charges including legal and restructuring costs, which tipped operating income down by 8.2%, although adjusted figures show a modest increase. The EPS beat gave way to a miss, with adjusted EPS at $0.68 falling short of expectations, fueling the stock’s pre-market setback. Despite this, management lifted guidance, signaling confidence in sustained growth and margin discipline.

Walmart’s Top-Line Momentum and Diversified Revenue Streams

• Constant Currency Growth: Walmart’s revenue rose 4.8% in reported terms but climbed 5.6% on a constant-currency basis, reflecting stronger demand across global markets. 
• Omni & Digital Strength: Global eCommerce grew 25%, including gains via store-fulfilled pickup, delivery, and marketplace platforms. 
• Advertising Boom: The global advertising business jumped 46%, with the U.S. Walmart Connect segment up 31%. 
• Membership Growth: Membership and other income climbed 5.4%, powered by a 15.3% surge in global membership income, a sign of sticky, recurring revenue. 

Operating Profit & Margin Dynamics of Walmart

• Operating Income Pressures: Reported operating income fell 8.2%, but on an adjusted constant-currency basis, it held steady with a 0.4% rise, supported by strong execution and cost discipline. 
• Margin Improvement: A slight uptick of 4 basis points in gross margin suggests tight operational control, especially in Walmart U.S.

What Went Wrong with Walmart; EPS Miss & One-Time Costs

• Adjusted EPS of $0.68 contrasted with a forecasted $0.73, marking the end of an 11-quarter streak of earnings beats. 
• Cost Factors: The earnings miss was partly due to legal expenses, restructuring charges, and elevated self-insured liability costs (about 560 basis points impact)

Company also recently came under scrutiny and public pressure after the U.S. Food and Drug Administration (FDA) issued a warning about radioactive contamination in frozen shrimp sold under the retailer’s Great Value brand. Read more here.

Market Reaction And Guidance From Walmart

• Stock Reaction: WMT Stock stock fell ~2.5–3.2% in pre-market trading on August 21 as per Google Finance despite top-line strength, as investors fixated on the EPS shortfall and the company’s elevated valuation.
• Valuation & Trend Risks: The premium valuation means any deviation, even a minor EPS miss, can trigger meaningful selloffs; stock is trading at higher P/E ratios than its peers.
• Sales & EPS Raised: Walmart lifted its full-year FY26 net sales growth projection to 3.75-4.75%, and adjusted EPS guidance to $2.52-2.62 per share, compared to prior outlooks of 3-4% and ~$2.50-2.60.
• Q3 Outlook: Net sales are expected to grow 3.75-4.75%, with operating income up 3-6% on a constant-currency basis.

What Comes Next For Walmart?

Walmart’s Q2 FY26 results reflect a company fundamentally in growth mode with revenue up nearly 5%, digital channels booming, and high-margin businesses like advertising and memberships expanding rapidly. Its raised outlook reinforces management’s belief in the underlying strength of the business.

Yet, intrusions from legal and restructuring costs, combined with a rare EPS miss, prompted investors to sell despite upbeat projections. This highlights how even giants like Walmart must meet lofty expectations to avoid market backlash.

Going forward, the key watchpoints will be whether eCommerce gains continue, if cost pressures ease, and how Walmart maintains profitability amidst a premium valuation. This quarter serves as both a reminder of the company’s resilience and a cautionary tale on managing expectations at scale.

Disclaimer:

The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities quoted are exemplary and are not a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument.The figures mentioned in this article are indicative and for general informational purposes only. Readers are encouraged to verify the exact numbers and financial data from official sources such as company filings, earnings reports, and financial news platforms. The Company strongly encourages its users/viewers to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355. IFSCA Broker-Dealer Registration No. IFSC/BD/2023-24/0016, IFSCA DP Reg No: IFSC/DP/2023-24/010.