Walmart's 2026 Q2 Earnings: Unpacking Contradictions in E-Commerce Profitability and AI Impact

E-commerce profitability and strategy, inventory management and tariff impact, AI impact on top line and margin gains, gross margin sustainability, and e-commerce growth strategy are the key contradictions discussed in Walmart's latest 2026Q2 earnings call.



Strong Financial Performance and E-commerce Growth:
- Walmart reported sales up 5.6% in constant currency, with e-commerce sales growing by 25% globally.
- Growth in transactions and units, particularly in the U.S. and Sam's Club U.S. at 26%, contributed to this performance.
- The growth in e-commerce is driven by improving delivery speeds and increased customer demand for convenient and fast delivery options.

International Sales and Market Expansion:
- International sales grew by 10.5% in constant currency, led by China, Walmex, and Flipkart.
- The company saw broad-based growth across product categories and events, with China's sales up 30%.
- This growth was supported by strong e-commerce performance, particularly through store-fulfilled pickup and delivery.

Advertising and Membership Income Growth:
- Global advertising revenue increased by 46%, with Walmart Connect in the U.S. up 31%.
- Membership income grew by 15%, with Walmart+ membership income growing double digits and Sam's Club U.S. membership income up 7.6%.
- These increases reflect the company's focus on diversifying revenue streams and leveraging its digital platforms to enhance customer engagement and loyalty.

Inventory Management and Pricing Strategy:
- Walmart maintained a healthy inventory level, with a 3.8% global increase and 2.2% in Walmart U.S., despite tariff-related cost pressures.
- The company managed inventory efficiently, with a significant number of rollbacks across categories, and focused on price leadership to mitigate tariff impacts.
- These strategies helped maintain strong sales growth while managing the challenges posed by tariff-related cost increases.