Walmart Inc

Equity Research 20 August 2026 | 8:11AM EDT

Walmart Inc. (WMT): First Take: 2Q earnings beat, but softer than expected underlying comp; FY26 guidance raised

WMT reported 2Q26 adj. EPS of $0.81, above GS/consensus (FactSet) both at $0.74. Kate McShane, CFA | Walmart US SSS of +2.6% came in below consensus at +3.5%, driven by traffic Goldman Sachs & Co. LLC (+1.5%) and average ticket (+1.1%); this includes an 80 bps headwind from health & Emily Ghosh wellness. By category, grocery was up +MSD, noting sales strength led by pantry and | fresh food, along with like-for-like inflation of +1.3%. Health & wellness declined Goldman Sachs & Co. LLC

-LSD, driven by +MSD growth in pharmacy script counts and ongoing market share Mark Jordan, CFA | gains, offset by ~900 bps negative impact from Maximum Fair Pricing implemented Goldman Sachs & Co. LLC 1/1/26. General merchandise was up +LSD, reflecting sales strength led by toys and fashion, along with like-for-like inflation of +1.7%. Global/Walmart US eCommerce Nishi Agarwal | net sales grew +23%/+24% (vs. +26% each in 1Q), while global/Walmart US Goldman Sachs India SPL advertising grew +38% including VIZIO/+43% ex VIZIO (vs. +37% including Grace Chee VIZIO/+44% ex VIZIO in 1Q), respectively. | Goldman Sachs & Co. LLC

Guidance: WMT raised 2026 guidance at the midpoint to net sales growth of Samantha Chiang | +4.0-5.0%, from +3.5-4.5% prior (vs. GS/consensus of +5.6%/+5.4%), adj. operating Goldman Sachs & Co. LLC income growth of +7.0-8.5%, versus +6.0-8.0% prior, and adj. EPS of $2.80-2.87, from $2.75-2.85 prior (vs. GS/consensus at $2.95/$2.90), which includes benefits from tariff refunds. WMT also introduced 3Q guidance to net sales growth of +3.0-3.75% (vs. GS/consensus of +5.3%/+4.7%), adj. operating income growth of +2.0-4.0%, and adj. EPS of $0.62-0.64 (vs. GS/consensus at $0.71/$0.68). Of note, 3Q sales guidance includes a headwind of over 100 bps related to a timing shift of Flipkart’s Big Billion Days between 3Q and 4Q, while the operating income guide reflects the continued prioritization of tariff refunds received in 2Q into customer experience and price investments in 2H.

Analysis n Gross margin of 25.4% (+91 bps y/y) tracked above GS/consensus at 24.6%/24.9%. For Walmart US, gross margin increased +158 bps y/y due to a benefit from tariff refunds, partially offset by price investments; it also reflects improved business mix primarily from growth of digital advertising, partially offset by higher fuel costs impacting distribution and fulfillment costs. n SG&A expense dollars tracked +7.9% higher y/y, while the expense ratio came in at 21.4% (+40 bps y/y), above GS/consensus at 21.0%/20.7%. For Walmart US, the expense ratio increased 72 bps y/y due to higher self-insured general liability claims expense, depreciation expense related to CapEx, and healthcare expenses (from increased associate enrollment and medical cost inflation), partially offset

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Goldman Sachs Walmart Inc. (WMT)

by expense leverage from increased labor productivity. n EBIT of $9,383mn tracked higher than GS/consensus of $8,597mn/$8,676mn, while EBIT margin of 5.0% was above our consensus-aligned estimate of 4.6%. n Total inventory increased +6.7% vs. total sales growth of +5.9%. For Walmart US, inventory increased +6.3% y/y, primarily due to strategic initiatives and inflation.

Implications The stock is currently down ~6% in the pre-market. On the call, we are looking for detail on QTD trends, the outlook for inflation, the promotional environment within grocery and general merchandise, the ramp of operating income dollar growth throughout the year and longer term, tariff refunds, and…