Walmart (WMT -4.11%), the global retail leader known for its vast network of stores and robust eCommerce platforms, reported earnings for its fiscal second quarter on August 21, 2025. The company announced GAAP revenue of $177.4 billion, up 4.8% from the prior year and beating the consensus GAAP estimate of $175.9 billion. Adjusted earnings per share were reported at $0.68, below analyst expectations of $0.73 but slightly above the prior year's $0.67. GAAP earnings per share reached $0.88 in the quarter ended July 31, 2025, increasing 57.1 % from the same period last year. The quarter displayed solid revenue and digital gains, but also revealed operating margin pressure from elevated expenses and legal costs. Despite this, Walmart raised its full-year outlook for both sales and adjusted earnings (adjusted EPS).
| Metric | Q2 FY26(ended July 31, 2025) | Q2 Estimate | Q2 FY25(ended July 31, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.68 | $0.73 | $0.67 | 1.5 % |
| EPS (GAAP) | $0.88 | $0.56 | 57.1 % | |
| Revenue (GAAP) | $177.4 billion | $175.9 billion | $169.3 billion | 4.8 % |
| Operating Income (GAAP) | $7.3 billion | $7.9 billion | (8.2 %) | |
| Free Cash Flow (Non-GAAP)(six months ended July 31) | $6.9 billion | $5.85 billion | 17.9 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Walmart and Its Business Model
Walmart operates one of the world’s largest retail businesses, serving around 270 million customers each week across 10,750 stores and a growing digital platform in 19 countries. Its business spans the U.S. Walmart and Sam’s Club formats, as well as international operations under brands like Walmex in Mexico and Flipkart in India.
The company’s driving principles include offering Everyday Low Prices and leveraging a vast supply chain to deliver value at scale. In recent years, Walmart has focused on strengthening its omni-channel model, connecting physical stores and digital platforms to boost convenience for shoppers. Key strategic priorities now include expanding its eCommerce footprint, building membership services, and growing its advertising and digital product revenue.
Quarter Highlights: Digital Expansion, Financial Results, and Strategic Progress
Walmart saw broad-based growth in both its core and high-margin areas. Total revenue rose 4.8% year over year, reflecting healthy demand in the U.S. and abroad. Walmart U.S. net sales climbed 4.8% year over year, with store-fulfilled digital transactions up nearly 50%, and overall eCommerce sales in the U.S. surged 26%. The international segment also posted gains, with reported net sales increasing 5.5%. and constant currency growth at 10.5% year over year, led by China, Mexico (Walmex), and Flipkart in India. Sam’s Club net sales in the U.S. rose 3.4%, with membership income up 7.6%.
Profitability metrics were mixed. Operating income (GAAP) declined 8.2% due to a $0.7 billion hit from legal and restructuring costs and a spike in self-insured liability claims. Adjusted operating income showed only slight growth, rising 0.4% in constant currency. Adjusted earnings per share ticked up 1.5 % but missed analyst estimates due to these headwinds. Gross margin for Walmart U.S. improved by 0.26 percentage points, but was offset by a 6.8% rise in operating expenses.
Walmart’s digital business continued its strong run. Global eCommerce sales increased 25%, while store-fulfilled delivery -- orders placed online for pickup or home delivery -- were up nearly 50% in the U.S. The company highlighted that about one-third of these orders were expedited. Its advertising business, Walmart Connect, expanded by 31% in the U.S, and 46% globally when including the VIZIO digital media division. Membership programs like Walmart+ and Sam’s Club added to total income, with global membership revenues increasing 15.3%.
The company’s supply chain and inventory position remained strong. U.S. inventory rose 2.2%, while overall inventory increased 3.8% year over year, reflecting stable in-stock conditions and strategic preparation for tariff-driven challenges. Walmart added more than 4,000 marketplace sellers in Canada and Mexico, with marketplace product assortment in these countries growing over 80% in the last quarter. Free cash flow (non-GAAP) for the first half of FY2026 improved 18.7% over the prior year. Walmart also returned $6.2 billion to shareholders through stock repurchases year to date, and capital expenditures ran at about 3.0-3.5% of net sales, matching earlier guidance.
Business Focus and Key Success Factors
Walmart’s strategy centers on omni-channel retailing, blending in-store and digital experiences. Its ability to execute this approach at scale has supported robust eCommerce growth and expanded digital offerings like membership programs and digital advertising. The success of these initiatives is evident in sustained online gains and higher-margin revenue, especially from advertising and marketplace platform services.
To maintain its advantage, Walmart focuses on controlling operational costs under its Everyday Low Cost model, a key part of how it offers consistently low prices to shoppers. The company’s global presence and extensive supply chain continue to underpin its ability to efficiently move goods and adapt to local conditions. Investment in technology, digital transformation, and workforce development are all identified as essential factors for long-term success and ongoing competitiveness.
Quarter Developments: Revenue Drivers, Expense Pressures, and Notable Events
Revenue growth outpaced both the company’s own guidance and Wall Street expectations. The U.S. business gained share in grocery, with comparable sales up 4.6% (excluding fuel) and outperformance in eCommerce. Transactions grew 1.5% year over year while the average ticket increased 3.1%. Membership income in both Walmart U.S. and Sam’s Club posted healthy increases.
Walmart’s global eCommerce expansion remained a key theme, with international eCommerce sales climbing 22% year over year and advertising revenue increased 15% in the company’s international segment. Platforms in countries like China, Mexico, and India (Flipkart) performed strongly, supplemented by growth in the marketplace -- a digital platform where third parties sell products directly to customers.
However, Walmart faced notable headwinds as operating expenses grew faster than revenue. Higher self-insured general liability claims alone created a 620 basis point headwind in Walmart U.S, while Sam’s Club saw elevated supply chain costs and further legal expenses. Selling, general, and administrative costs rose 8.0% year over year, weighing on overall profitability. Shifts in currency markets also muted the headline growth for international operating income.
Walmart reported operating cash flow of $18.4 billion for the first half of FY2026 and free cash flow at $6.9 billion, up $1.1 billion year over year. Inventory management remained a priority amid ongoing tariff policy uncertainty, with management highlighting the risk of profit swings due to future inventory markdowns related to tariff-driven cost increases.
Look Ahead: Guidance and What to Watch Next
Walmart raised its full-year net sales growth forecast to a range of 3.75% to 4.75% in constant currency, up from a prior 3.0% to 4.0%. The company also lifted its adjusted (non-GAAP) earnings per share outlook to $2.52 to $2.62, compared to the previous range of $2.50 to $2.60 adjusted EPS. For the third quarter, Walmart expects sales to increase by 3.75 % to 4.75 %, and operating income to grow by 3.0% to 6.0%, both in constant currency. Adjusted EPS guidance now stands between $0.58 and $0.60. The company noted that profit fluctuations are likely to continue due to tariff policy, inventory timing, and ongoing expense pressures.
Looking forward, investors should monitor trends in operating margins, the pace of eCommerce and advertising growth, and the impact of ongoing cost controls. Persistent risk factors include tariff adjustments, changes in global currency values, and rising insurance and supply chain expenses. Walmart continued to warn that accounting for inventory and timing of tariff-related markups or markdowns could create swings in earnings.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
