Q2 2027 Walmart Inc Earnings Call Transcript
Key Points
- Strong financial performance with enterprise net sales growth of 5% in constant currency, at the top end of guidance, and adjusted operating income growth of 17.4%.
- E-commerce momentum continues with global e-commerce sales up 23%, including Walmart US up 24% and Sam's Club US up 26%.
- High-margin businesses like advertising (up 38%), Marketplace (up 52%), and membership income (up 17%) are driving profit mix and improving overall economics.
- Price investments, including over 11,000 rollbacks, are driving market share gains, particularly in food categories, and are expected to have a durable impact.
- Supply chain automation and technology investments are improving efficiency, with 3,100 US stores served by automated freight and over 50% of e-commerce fulfillment volume processed through automated facilities.
- Membership programs are thriving, with Walmart+ achieving its best first half of membership growth and Sam's Club US membership up nearly 6%.
- The company raised its full-year sales and operating income guidance, reflecting confidence in sustained growth and share gains.
- Walmart US comp sales were impacted by a 125 basis point headwind from Maximum Fair Pricing regulation, which is expected to persist for the full year.
- Higher fuel costs are expected to add more than $2 billion in incremental costs this year, pressuring margins and consumer spending.
- In-store comps declined low single digits, partly due to the pharmacy headwind and a shift to e-commerce, though stores remain crucial for fulfillment.
- SG&A expenses increased due to higher depreciation from CapEx and elevated self-insurance costs, including group health and claims.
- Inventory levels increased 6% in constant currency, slightly above sales growth, due to cost inflation and strategic investments in fulfillment network optimization.
- Q3 operating income growth is expected to be modest (2% to 4%) as the full impact of price investments is realized, with a note to consider Q2 and Q3 together.
- The consumer environment is softening, with pressure from higher gas prices and trade-down behavior, particularly among lower-income households.
Greetings. Welcome to Walmart's second quarter fiscal '27 earnings call. (Operator Instructions) I'll now turn the conference over to Steph Wissink, Senior Vice President, Investor Relations.
Thank you, Steph. You may begin.
Welcome, everyone. Joining me today from our home office in Bentonville are CEO, John Furner; and CFO, John David Rainey. We'll begin with highlights of the previous quarter and our outlook for the year. Then we'll open the line for your questions.
During the question-and-answer portion, we've invited Seth Dallaire, our Chief Growth Officer as well as segment leadership to join. Dave Guggina from Walmart US; Chris Nicholas from Walmart International; and Latriece Watkins from Sam's Club US. So we can address as many of your questions as possible, please limit yourself to one question. For additional detail on our results, including highlights by segment, please see our earnings release and supplemental presentation on our website.
Today's call
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