Walmart 2026 Q1 Earnings Misses Targets as Net Income Declines 12.6%

Walmart (WMT), ranking 13th by market capitalization, reported its fiscal 2026 Q1 earnings on May 14th, 2025. The retail giant's results missed expectations, with net income declining by 12.6% compared to the previous year. Despite a drop in earnings, Walmart reaffirmed its guidance for fiscal year 2026, projecting consolidated net sales growth of 3% to 4% and adjusted EPS between $2.50 and $2.60. The company continues to focus on technology investments and store remodels to drive growth.

Revenue
Walmart's total revenue increased by 2.5% to $163.98 billion in Q1 2026, up from $159.94 billion in the same quarter of the previous fiscal year. Contributing to this growth, Walmart U.S. generated $112.16 billion, while Walmart International produced $29.75 billion. Sam’s Club U.S. added $22.06 billion to the total, and membership and other income contributed $1.63 billion. The consolidated revenue reached $165.61 billion.

Earnings/Net Income
Walmart's EPS fell 11.1% to $0.56 in Q1 2026 from $0.63 in Q1 2025. Net income decreased to $4.64 billion, a 12.6% decline from $5.31 billion a year earlier. The company's EPS performance indicates challenges amid revenue growth.

Price Action
The stock price of Walmart has edged up 0.84% during the latest trading day, has edged down 2.02% during the most recent full trading week, and has climbed 4.34% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Walmart shares after a quarterly revenue drop on the financial report release date and holding for 30 days has delivered strong returns over the past five years. This approach has achieved an overall return of 119.13%, outperforming the benchmark return of 87.91% by 31.22%. Despite experiencing a maximum drawdown of -27.01%, the strategy demonstrates a reasonable Sharpe ratio of 0.80, suggesting good risk-adjusted returns. Investors who have adopted this strategy have enjoyed notable success, benefiting from the company's resilience and market position. The consistent performance underscores the potential for strategic trading around earnings releases, although investors should remain aware of the inherent risks and market fluctuations.

CEO Commentary
C. Douglas McMillon, Chief Executive Officer, expressed confidence in Walmart's performance, highlighting strong sales growth driven by customer demand for value and convenience. He noted that transaction counts and unit volumes were up across markets, supported by effective inventory management and low prices. McMillon emphasized the importance of expanding e-commerce capabilities and enhancing customer experience, stating, “We’re wired to help people save money and live better.” He acknowledged ongoing investments in supply chain automation and technology, positioning Walmart for sustained growth while maintaining a focus on profitability and operational efficiency.

Guidance
Walmart expects consolidated net sales growth of approximately 3% to 4% for fiscal year 2026, with adjusted EPS projected between $2.50 and $2.60. The company anticipates capital expenditures to be around 3% to 3.5% of sales, focusing on technology investments, store remodels, and new store openings. For the first quarter of fiscal year 2026, net sales growth is expected to be in the range of 3% to 4%, and EPS is projected to be between $0.57 and $0.58.

Additional News
Walmart has recently filed its 2025 Annual Report and Proxy Statement, preparing for the Annual Shareholders’ Meeting scheduled for June 5, 2025. In the report, CEO Doug McMillon highlighted a 5.1% revenue increase and an 8.6% rise in operating income for the year. The company remains committed to investing in associate wages, healthcare, and education. Additionally, Tom Horton will step down as the lead independent director, with Randall Stephenson expected to take over the role. Walmart announced a 13% dividend increase, marking its 52nd consecutive year of dividend growth. These developments underscore Walmart's strategic focus on growth, governance, and shareholder value.