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Walmart shares fall 9% after earnings as comps decelerate
Walmart cited pharmacy headwinds from new drug regulations and said tariff refund-driven margins are not expected to repeat in Q3.
Walmart Inc. reported fiscal Q2 2027 results that beat on the top and bottom line but still sent its shares down 9% after the company released results before the market opened Aug. 20, according to MarketBeat Ratings. The update came as retail sales data for July showed a surprise month-over-month decline of 0.6% to $763.6 billion, the first such drop since October 2025.
In the quarter, U.S. comparable sales grew 2.6%, and Walmart added 96 basis points of gross margin, while also raising full-year sales guidance. However, the margin boost was supported by $2.9 billion in tariff refunds that management said it plans to return to customers through price reductions, and it noted that roughly 750 bps of operating income growth from tariff refunds would not be repeated in Q3.
MarketBeat Ratings also highlighted that the more concerning piece for investors was the deceleration in comps, which slowed from 4.1% and 4.6% in fiscal Q1 2027 and Q4 2026. Management attributed 125 bps of the decline to new drug regulations affecting pharmacy sales, but the article points to a larger driver of smaller transaction sizes rather than fewer customers.
The preview further used Sam’s Club as an example of that shift, citing 4.4% comps ex-fuel alongside a 2.5% ticket decline despite a 7% increase in transactions, framing the pattern as consumers trading down to value. For Q3, Walmart guided operating income to a range of 2% to 4%, which the article said helps explain the negative reaction after the release.