Walmart(WMT -5.01%) reported fiscal second quarter 2026 earnings (period ended August 2, 2025) on August 21, 2025, highlighting 5.6% constant currency revenue growth and 25% global e-commerce expansion. Consolidated adjusted operating income increased 0.4% year-over-year despite a $450 million incremental general liability claims expense, while full-year sales growth guidance for fiscal 2026 was raised by 75 basis points to 3.75%-4.75%. The following analysis provides insight into strategic shifts in e-commerce, margin resiliency, and AI acceleration.
E-commerce and membership drive Walmart's profit diversification
Global e-commerce sales rose 25% year-over-year in the fiscal second quarter, including 26% growth in U.S. e-commerce and strong marketplace participation, with 44% of marketplace volumes flowing through Walmart Fulfillment Services (WFS). Sam’s Club and Walmart International both delivered more than 20% e-commerce growth year-over-year, while advertising grew 46% globally, and membership income increased over 15% year-over-year in the quarter.
"As our business model evolves, contributions to operating income are increasingly influenced by a diverse set of interrelated drivers. Including improved e-commerce economics and business mix, most notably from higher margin areas, like advertising and membership fees. Walmart US e-commerce profitability continued to increase in Q2. As we make progress on improving net delivery costs and see strong momentum in advertising. We invested in marketing to improve awareness of Walmart's value, convenience, and assortment. Install growth in active customers and frequency, With strong growth in e-commerce, our advertising business globally increased nearly 50% including Visio. Walmart Connect in the US, ex VIZIO, grew more than 30%."
-- John David Rainey, CFO
The acceleration of higher-margin businesses such as advertising and membership is structurally increasing Walmart’s profit resilience by reducing dependency on low-margin core retail.
Walmart demonstrates margin flexibility amid tariff and claims headwinds
Walmart recorded $450 million in additional general liability and workers’ compensation claims, constituting a 560 basis point headwind to adjusted operating income growth; nonetheless, U.S. segment margins remained intact due to proactive inventory and pricing management. Over 7,400 price rollbacks were offered, up nearly 2,000 from the fiscal first quarter 2026, with a 30% year-over-year increase in grocery rollbacks to offset tariff-driven cost increases.
"Our business is able to overcome the additional expenses and still deliver profit growth. The model we're building gives us more price and wage flexibility, and it also means we're better positioned when unusual items come our way."
-- Doug McMillon, CEO
Such demonstrated operational agility safeguards market share and sustains profit growth even when faced with unpredictable external shocks such as tariffs or legal claims.
Walmart accelerates global AI investment for future productivity gains
Walmart created new executive roles focused specifically on AI product management and platform architecture, and launched early-stage deployment of 'super agents' like Sparky, the customer-facing virtual assistant embedded in its app.
"For a few quarters now, I've been commenting on our use of artificial intelligence. Our enthusiasm for how AI can help us serve customers and members better, improve the experience for our associates, and increase productivity continues to grow. It's been years since we made a structural change for a role reporting to the CEO, and we've done it in this case because we're clear on a path to accelerate. Daniel Denker has joined us to lead AI acceleration product management, design, tech prioritization, and AI-related change management. Daniel brings tremendous expertise and experience from places like Instacart and Uber. We also announced a new role reporting to Suresh Kumar, our chief technology officer, that will focus on AI platforms. This role will help us increase innovation, speed, and productivity. Own the AI platforms, and architect our intelligent system stack. We're building agents into the core of how we operate. Including four super agents, there'll be many agents that roll up to these super agents that our customers, associates, and other stakeholders experience. First is Sparky. Sparky is the customer-facing assistant you see smiling at the bottom of our app. Today, Sparky takes us from traditional search to intelligent AI-powered assistance. Sparky will develop agentic capabilities over time. Customers are giving us positive feedback, and we're excited about the roadmap ahead. As we improve and scale Sparky, make it even smarter and more personalized. It'll be the primary digital vehicle for discovery, shop, and for managing everything from reorders to returns. We see Sparky becoming an indispensable part of how people shop with us."
-- Doug McMillon, CEO
Investing in proprietary AI infrastructure at executive level positions Walmart to unlock significant labor productivity, personalized shopping, and rapid fulfillment advantages over time, which could enhance cost efficiency and long-term competitiveness.
Looking Ahead
Management raised constant currency full-year sales growth guidance to 3.75%-4.75% and expects fiscal third quarter sales growth within the same range. Adjusted operating income growth guidance remains unchanged at 3.5%-5.5%, fully absorbing unplanned claims expenses, with fiscal third quarter operating income targeted for 3%-6% growth. Walmart is launching the OnePay cash rewards credit card before the holidays.
