Walmart Delivers a Strong Q2 Performance

Walmart delivered another solid quarter of top-line growth, showing its ability to consistently capture share even in a highly competitive retail environment.

Revenue rose nearly 5% (5.6% constant currency), with all three major segments—Walmart U.S., Walmart International, and Sam’s Club—posting gains. However, profitability pressures remain evident: operating income declined 8.2% on a reported basis, largely due to legal/restructuring costs and higher liability claims, although adjusted operating income was flat in constant currency.

The standout theme this quarter is Walmart’s digital flywheel. eCommerce and advertising growth continue to outpace the rest of the business, demonstrating the strength of Walmart’s omnichannel ecosystem.

Key Highlights by Segment

Walmart U.S.

• Comp sales +4.6% reflect broad-based strength in grocery and health & wellness, with general merchandise posting low single-digit gains.
• eCommerce surged 26%, led by nearly 50% growth in store-fulfilled delivery. Speed matters—about one-third of orders were delivered in under three hours, setting Walmart apart on convenience.
• Advertising via Walmart Connect grew 31%, a clear signal of the retailer’s success in monetizing its digital traffic.
• Despite cost headwinds from liability claims, operating income rose 2%, underscoring improved inventory management and stronger eCommerce economics.

Trend Insight: Walmart’s strategy of leveraging its physical footprint to fulfill digital orders is paying off. This “store-as-hub” model is driving speed, customer satisfaction, and incremental revenue streams through advertising.

Walmart International

• Net sales grew 10.5% in constant currency, led by China (+30%) and Mexico.
• Flipkart and Walmex continue to shine, with strong festive event execution and robust unit growth.
• eCommerce grew 22%, maintaining momentum across markets.
• Operating income declined (–2.8% in cc) due to strategic investments in India, Canada, and Mexico, as well as FX headwinds.

Trend Insight: International remains a growth engine, especially in emerging markets, but Walmart is deliberately reinvesting to secure long-term leadership. The balance between growth and profitability will be key here.

Sam’s Club U.S.

• Sales grew 6% ex-fuel, with comp sales up 5.9%—a healthy mix of transactions (+3.9%) and average ticket growth (+2%).
• eCommerce rose 26%, now accounting for 18% of sales, with Scan & Go adoption up 600 bps.
• Membership income grew 7.6%, with steady growth in Plus members, renewal rates, and penetration.
• Operating income fell sharply (–15.8%) due to $80M in supply chain reorganization charges and higher claims expenses.

Trend Insight: Sam’s Club is steadily gaining traction as a digital-forward membership model. The growth in Scan & Go and club-fulfilled delivery reflects how warehouse clubs can reinvent convenience for members.

Strategic Themes and Trends for Walmart

1. Digital Acceleration – eCommerce and advertising (up 25% and 46% respectively) are central to Walmart’s growth strategy, moving the company beyond traditional retail into platform economics.
2. Membership as a Growth Lever – With double-digit Walmart+ fee growth and solid Sam’s Club member engagement, recurring revenue streams are strengthening stickiness and long-term value.
3. Omnichannel Differentiation – Walmart’s ability to combine price leadership with delivery speed and convenience gives it an edge against both traditional grocers and pure-play eCommerce competitors.
4. International Investment – Walmart is leaning into high-growth markets, particularly China, India, and Mexico. Near-term profitability is impacted, but these bets reinforce Walmart’s global scale advantage.
5. Profitability Headwinds – Higher self-insurance liability claims and restructuring costs weighed on earnings. Walmart is offsetting this with improved gross margins and mix benefits, but expense management remains a watchpoint.

Forward-Looking View

Walmart’s decision to raise FY26 sales and EPS guidance underscores confidence in its strategy. While inflation and cost pressures remain, the company is proving that its combination of digital scale, pricing power, and membership economics can deliver consistent growth. Investors and competitors alike should note how quickly Walmart is evolving into a people-led, tech-powered ecosystem rather than just a retailer.