Walmart's 2026 Q1 Earnings: Unpacking Key Contradictions in E-Commerce Profitability and Growth Strategy
Sunday, May 18, 2025 3:24 am ET
3min read E-commerce profitability and investment strategy, general merchandise performance and growth strategy, investment strategy and margin expansion, advertising growth and membership income, inventory management and tariff impact are the key contradictions discussed in Walmart's latest 2026Q1 earnings call.
Strong E-commerce Growth and Profitability:
- Walmart achieved profit in its e-commerce segment globally and in the U.S. for the first time, marking a significant milestone.
- This was driven by factors such as the densification of last-mile deliveries and customers increasingly opting for faster delivery options, reducing delivery costs, and diversified revenue streams such as advertising and membership fees.
Impact of Tariffs and Cost Management:
- Walmart is facing challenges from elevated tariffs, particularly from China and other countries, which are impacting the cost of general merchandise.
- The company is managing these costs through supplier negotiations, adjusting product sourcing, and leveraging its strong supply chain and replenishment capabilities to mitigate price pressure and maintain profitability.
Retail and Inventory Management:
- Walmart's retail segment grew 4% in constant currency, with U.S. comp sales growing by 4.5%.
- The company successfully managed inventory, with a mix of strategy adjustments such as moving production and shifting material compositions to manage cost pressures effectively.
Growth in Membership and Advertising:
- Walmart's membership income grew nearly 15% across the enterprise, with U.S. Sam's Club membership income increasing by 9.6%.
- The advertising business across markets increased by 50%, driven by growth in Walmart Connect and Sam's Club U.S. advertising.
International Market Performance:
- Walmart's international business grew sales by 7.8% in constant currency, led by strong performance in China and Flipkart.
- The growth in international markets was supported by an increase in delivery speed and expansion of digital platforms, contributing to increased gross margins in international segments.
Strong E-commerce Growth and Profitability:
- Walmart achieved profit in its e-commerce segment globally and in the U.S. for the first time, marking a significant milestone.
- This was driven by factors such as the densification of last-mile deliveries and customers increasingly opting for faster delivery options, reducing delivery costs, and diversified revenue streams such as advertising and membership fees.
Impact of Tariffs and Cost Management:
- Walmart is facing challenges from elevated tariffs, particularly from China and other countries, which are impacting the cost of general merchandise.
- The company is managing these costs through supplier negotiations, adjusting product sourcing, and leveraging its strong supply chain and replenishment capabilities to mitigate price pressure and maintain profitability.
Retail and Inventory Management:
- Walmart's retail segment grew 4% in constant currency, with U.S. comp sales growing by 4.5%.
- The company successfully managed inventory, with a mix of strategy adjustments such as moving production and shifting material compositions to manage cost pressures effectively.
Growth in Membership and Advertising:
- Walmart's membership income grew nearly 15% across the enterprise, with U.S. Sam's Club membership income increasing by 9.6%.
- The advertising business across markets increased by 50%, driven by growth in Walmart Connect and Sam's Club U.S. advertising.
International Market Performance:
- Walmart's international business grew sales by 7.8% in constant currency, led by strong performance in China and Flipkart.
- The growth in international markets was supported by an increase in delivery speed and expansion of digital platforms, contributing to increased gross margins in international segments.
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