tapebrief
WMT · Q4 2026

WMT · Q1 2027 Earnings

Bullish

Walmart

Reported May 21, 2026

30-second summary

Walmart printed Q1 revenue of $177.8B (+7.3% reported / +5.9% cc) and adjusted EPS of $0.66 — cc sales landed ~140bps above the top end of the +3.5–4.5% cc guide (CFO quoted 120bps over the top end), EPS came in $0.01 above the $0.63–0.65 range, and adjusted OI growth of +5.1% cc landed in-line with the +4–6% guide (pressured by ~$175M / 250bps of unplanned fuel costs). Management reaffirmed the full FY27 framework — sales +3.5–4.5% cc, adjusted OI +6–8% cc, EPS $2.75–$2.85 — explicitly absorbing the fuel-cost headwind without flinching. The Q2 guide of +4–5% cc sales and $0.72–$0.74 EPS implies sequential deceleration from Q1's cc print, but adjusted OI growth accelerates to +7–10% cc, signaling that the alternative-profit-pool engine (ads +37%, membership +17.4%) is now reaching the OI line consistently.

Headline numbers

EPS

Q1 FY2027

$0.66

Revenue

Q1 FY2027

$177.75B

+7.3% YoY

Gross margin

Q1 FY2027

24.3%

Free cash flow

Q1 FY2027

$-1.95B

Operating margin

Q1 FY2027

4.3%

Key financials

Q1 FY2027
MetricQ1 FY2027Q1 FY2026YoYQ4 FY2026QoQ
Revenue$177.75B$165.60B+7.3%$190.70B-6.8%
EPS$0.66$0.61+8.2%$0.74-10.8%
Gross margin24.3%24.2%+10bps24.0%+30bps
Operating margin4.3%4.4%-10bps4.6%-30bps
Free cash flow$-1.95B$0.42B-557.9%——

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Adjusted EPSQ1 FY2027$0.63 to $0.65$0.66+0.01 to +0.03 above guideBeat
Net Sales Growth (constant currency)Q1 FY20273.5% to 4.5% YoY7.3%+2.8–3.8 pts above guideBeat
Adjusted Operating Income Growth (constant currency)Q1 FY20274.0% to 6.0% YoYoperating margin 4.3%above guided range based on operational performanceBeat

New guidance

MetricPeriodGuideYoY
Adjusted EPSQ2 FY2027$0.72 to $0.74+10.8–13.5% YoY
Net Sales Growth (constant currency)Q2 FY20274% to 5%+0.6–2.7% YoY
Adjusted Operating Income Growth (constant currency)Q2 FY20277% to 10%—

Reaffirmed unchanged this quarter: Adjusted EPS (full year) ($2.75 to $2.85), Net Sales Growth (constant currency) (3.5% to 4.5%), Adjusted Operating Income Growth (constant currency) (6.0% to 8.0%), Interest, net (Increase approximately $200M to $300M), Effective Tax Rate (Approximately 23.5% to 24.5%)

Segment performance

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
Walmart U.S.$117.169B$112.2B+4.4%
Walmart International$35.11B$29.8B+17.8%
Sam's Club U.S.$23.405B$22.1B+5.9%

Platform metrics

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
eCommerce sales growth (global)26%——
Walmart U.S. comp sales (ex. fuel)4.1%——
Global advertising business growth37%——
Walmart U.S. advertising growth36%——
Membership fee revenue growth (global)17.4%——
Sam's Club U.S. comp sales (ex. fuel)3.9%——

Profitability

Q1 FY2027
SegmentQ1 FY2027Q1 FY2026YoY
Return on Assets (trailing 12 months)8.4%——
Return on Investment (trailing 12 months)14.9%——

Management tone

From "tariffs jeopardize our ability to grow earnings" to absorbing fuel-cost shocks without flinching. A year ago Walmart withdrew Q2 operating income guidance entirely, conceding it could not absorb tariff pressure. This quarter the CFO reaffirms the full FY framework explicitly despite ~$175M of unplanned Q1 fuel costs (and management framed full-year exposure as "hundreds of millions of dollars of pressure from higher fuel prices"). Anchor: "we are probably as excited about the potential of our business today than at any point in time in the last few years." The shift signals that management now views the alternative-profit-pool engine (ads, membership, marketplace) as durable enough to absorb commodity shocks that would have required guide-downs a year ago.

From defensive flow-through ("sales up, OI flat") to mix-driven OI acceleration as the explicit guide shape. Q2 FY26's structural concern was that high-margin profit pools weren't translating to OI growth because casualty and tariff costs were consuming the lift. This quarter management guides Q2 FY27 OI growth (+7–10% cc) to materially outpace sales growth (+4–5% cc) — the inverse shape — and discloses that "these profit streams represented approximately one-third of operating income." Quantifying the mix at one-third of OI is a milestone disclosure; it converts the diversification thesis from qualitative to balance-sheet-anchored.

From speed-as-customer-feature to speed-as-operating-leverage. Across Q1–Q4 FY26 management framed sub-30-minute delivery as a customer experience win. This quarter the framing hardens: "As the economics continue to improve, speed becomes an engine of operating leverage, not just a better experience for customers and members." With 60% of US households now reachable within 30 minutes, the store-fulfillment network is being explicitly reframed as a recurring-margin asset rather than a cost-of-competition item.

From general merchandise as a multi-quarter drag to the rare positive mix tailwind. Management called out that Q1 marked "the first time in 18 quarters that merchandise mix contributed favorably to Walmart US gross margin expansion" and the "highest level of general merchandise share gains in five years." This is the first quantitative evidence that the GM revitalization thesis is real, and management was direct in Q&A that Q2 likely won't repeat the same magnitude — setting up a sustainability watch item.

New theme: AI moves from supply-chain efficiency to monetizable customer engagement. Q2 FY26 management explicitly said AI wasn't lifting top-line sales. This quarter Sparky units purchased grew 4x QoQ, expanding from general merchandise discovery into food and consumables. The reframe from productivity to demand-generation is the highest-conviction forward narrative on the call.

Recurring themes management leaned on this quarter:

AI-native transformation driving customer engagement (Sparky 100%+ WAU growth)Speed-to-delivery as core competitive moat converting to recurring margin expansionHigh-margin alternative revenue (advertising, membership, marketplace) now material to earningsMarket share gains across all income cohorts despite consumer pressureGeneral merchandise revitalization as unexpected profit contributorOmnichannel infrastructure (10,900+ stores) enabling cost-efficient fulfillment

Risks management surfaced:

Consumer pressure from higher fuel prices, particularly on lower-income householdsSustained elevated fuel cost environment creating COGS headwinds if prolongedPotential retail price inflation in Q2 and H2 if fuel prices persistCompetitive pressure from rivals investing in price to recapture shareMacro uncertainty and economic sensitivity for lower-income customer segment

Q&A highlights

Scott Ciccarelli · Truist Securities

Asked about the significant increase in 30-minute or less delivery capability reaching 60% of U.S. population, seeking clarity on usage of fee-generating fast delivery services and rollout pace

Fast delivery sales grew over 50% YoY in Q1 driven by customer adoption and higher AOV. Drone delivery program hit 1 millionth delivery in Q1 with 40% completed in Q1, currently live in 66 locations across 4 states (Texas, Georgia, North Carolina, Arkansas). Management emphasized that 11,000 retail locations provide inventory deployment advantage and automation investments are progressing faster than previous years, with roughly halfway completion on fulfillment center and RDC automation.

Fast delivery sales growth: >50% YoY in Q11 millionth drone delivery achieved in Q140% of all drone deliveries completed in Q166 drone delivery locations across 4 states

Oliver Chen · TD Cowen

Asked about the momentum in Sparky AI assistant, including average order lift and categories driving growth, and broader AI strategy priorities balancing customer experience with supply chain innovation

Sparky now live across app, web, and in-store with expanded capabilities including personalized replenishment, meal planning, and intelligent recommendations. Early engagement centered on general merchandise discovery but has expanded to everyday essentials (food and consumables). Units purchased through Sparky have grown 4x since previous quarter, with increasing use for food and consumables categories.

Sparky units purchased growth: 4x since previous quarterSparky live across app, web, and in-storeCapabilities: personalized replenishment, meal planning, intelligent recommendationsCategory shift: from general merchandise discovery to everyday essentials and food/consumables

Seth Sigman · Barclays

Asked about health and wellness category moderation, underlying business dynamics, GLP-1 impact and outlook, and whether GLP-1 pricing pressure is freeing up consumer spending in other categories

Health and wellness comps moderated but headwind was primarily driven by Maximum Fair Pricing legislation enacted in January, creating 100 basis point drag. Excluding MFP impact, health and wellness grew mid-high single digits with strong underlying fundamentals. Prescription volumes growing, pharmacy gaining market share, and pharmacy delivery performing well with ~20% of deliveries arriving in under 3 hours. Management indicated underlying business remains very strong despite headline moderation.

Maximum Fair Pricing legislation headwind: 100 basis pointsHealth and wellness growth excluding MFP: mid-high single digitsPharmacy delivery under 3 hours: ~20% of deliveriesPrescription volume growth confirmed

Chuck Grom · Gordon Haskett

Asked about the rare positive contribution of product category mix to gross margins in Q1, seeking context on how mix headwinds from health and wellness and grocery gains had pressured margins in prior years and the opportunity set ahead

Management confirmed this is the first time in their tenure and 18 quarters since merchandise category mix was a tailwind to gross profit. Acknowledged fuel price increases obscured some progress. Indicated Q2 likely won't show same improvement magnitude as Q1, potentially due to tax refund benefits in Q1. Outlined multi-year path where general merchandise (via marketplace expansion) will be key margin driver given its higher gross profit versus food.

First time in 18 quarters with positive category mix tailwindFuel price headwind obscured some Q1 margin progressQ2 margin improvement expected to be lower than Q1Tax refunds contributed to Q1 benefit

Corey Tarlow · Jefferies

Asked how to interpret Q2 EBIT guidance showing acceleration despite incremental fuel headwinds, and how margin improvement discussed earlier reconciles with operating income acceleration guidance

Management provided currency-neutral EBIT guidance of 7-10% with 130 bps FX tailwind, translating to ~11.5% reported growth or effectively double-digit growth. Explained that Q1 was expected to be most challenging quarter operationally, with acceleration expected through Q2 and H2. Noted business lapping higher claims expense from prior year but maintaining guidance despite hundreds of millions in fuel price pressure. Confirmed acceleration of core business drivers offsetting headwinds.

Q2 EBIT guidance (currency-neutral): 7-10%FX tailwind: 130 basis pointsReported basis EBIT growth estimate: ~11.5% (double digits)Q1 characterized as most challenging quarter operationally

Answers to last quarter's watch list

Q1 FY27 actual sales growth vs. the +3.5–4.5% cc guide. Q1 cc sales printed +5.9%, ~140bps above the top end of the guided range, confirming the conservative-opening-guide pattern. Status: Resolved positively
Q1 FY27 EPS vs. the $0.63–0.65 guide. Adjusted EPS came in at $0.66, $0.01 above the top end. Status: Resolved positively
Global advertising growth trajectory — whether it stabilizes above ~30%. Global ads +37%, Walmart US ads +36% — comfortably above the +30% threshold. The alternative-profit-pool thesis is intact and now quantified at ~one-third of operating income. Status: Resolved positively
Whether FY27 capex at ~3.5% of sales translates to incremental automation milestones. Management disclosed ~half of US FC volume is automated and >50% of RDCs are in various stages of being retrofitted; automation investments are progressing faster than previous years. No fulfillment-cost-per-unit metric yet, but the rollout pace disclosure is incremental. Status: Continue monitoring
Tariff and policy commentary cadence. The press release frames the H2 cost narrative around fuel costs, not tariffs — a meaningful shift from FY26's tariff dominance. Management noted IEPA tariff refund potential but said guidance assumes no impact. Status: Resolved positively (tariff overhang has materially receded)
US eCommerce contribution margin specifically. Not disclosed at consolidated level; CFO noted US e-commerce incremental margins were ~12% in the quarter. Status: Continue monitoring
PhonePe IPO timing and structure. No incremental disclosure on PhonePe IPO timing or additional charges this quarter. Status: Continue monitoring

What to watch into next quarter

Q2 FY27 sales actual vs. the +4–5% cc guide. With Q1 cc printing +5.9% against a +3.5–4.5% guide, Q2 is the test of whether the conservative-guide pattern continues or whether the Q1 print included one-time tax-refund and timing benefits that genuinely don't repeat.

Whether Q2 merchandise mix contribution remains positive. Management explicitly flagged Q2 won't show the same magnitude as Q1's 18-quarter-first positive mix contribution. Watch for whether mix turns flat or stays modestly positive — the latter would extend the multi-year margin trajectory thesis.

Walmart International OI growth sustaining double-digits. Q1 international OI grew >10% on the back of Asia strength. The international segment is now the highest-growth profitability story in the portfolio; deceleration below +10% would weaken the consolidated OI bridge.

Global advertising — whether it holds above +30% with deceleration from +37%. A print below +30% in Q2 would materially weaken the alternative-profit-pool thesis carrying FY27 margin expansion.

Sparky engagement disclosure cadence. Management quantified 4x QoQ unit growth — if this becomes a recurring disclosure with sustained acceleration, it converts AI from narrative to a tracked monetization line. Watch for whether Q2 maintains specific unit or AOV metrics.

Fuel cost persistence and Q2 retail price inflation commentary. Management said "we'd expect somewhat higher retail price inflation in Q2 and the second half of the year" if elevated fuel costs persist. Watch whether unit volumes hold as ticket inflation re-emerges, especially in lower-income cohorts where fuel pressure is most acute.

US eCommerce contribution margin disclosure. A multi-quarter watch item; quantification would materially upgrade the investment case.

Sources

  1. Walmart FY27 Q1 Earnings Release — https://www.sec.gov/Archives/edgar/data/104169/000010416926000095/earningsreleasefy27q1.htm
  2. Walmart FY26 Q4 Earnings Release (prior FY27 guidance baseline) — https://www.sec.gov/Archives/edgar/data/104169/000010416926000032/earningsreleasefy26q4.htm
  3. Walmart FY26 Q2 Earnings Release (Q2 FY26 YoY baseline) — https://www.sec.gov/Archives/edgar/data/104169/000010416925000120/earningsreleasefy26q2.htm

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