Why is Walmart stock falling 7% despite earnings beat and raised outlook?

Walmart raised its full-year financial forecasts after beating Wall Street expectations for revenue and adjusted earnings in the latest quarter, but the stock WMT fell over 7% during premarket trading as US comparable sales came in well below expectations.

Investors also focused on slowing traffic and weaker spending per transaction.

Walmart reported quarterly revenue of $187.9 billion (approx. €163.9 billion), up nearly 6% year over year and ahead of the roughly $186 billion (approx. €162.2 billion) expected by analysts, according to Bloomberg consensus data.

Adjusted earnings per share came in at 81 cents, compared with Wall Street expectations of 74 cents.

Despite the beat, Walmart's US comparable sales rose 2.6%, significantly below the 3.8% increase expected by analysts, according to LSEG data.

The slowdown was also visible in customer activity.

Average ticket increased 1.1%, matching the previous quarter but falling sharply from 3.1% growth in the second quarter of 2026.

Transactions increased 1.5%, compared with 3% growth in the first quarter.

The figures suggest that while Walmart continues to attract customers, shoppers are becoming more cautious about how much they spend during each visit.

Pharmacy headwinds weigh on sales

Part of the weakness came from Walmart's health and wellness business, where comparable sales declined in the low single digits.

The company said the category was affected by a roughly 900-basis-point impact from the implementation of maximum fair price provisions under the Inflation Reduction Act, which allows Medicare to negotiate prices for certain prescription drugs.

Excluding health and wellness, Walmart's core merchandise comparable sales increased 3.4%.

The pharmacy impact has been a growing concern for investors.

Earlier this month, Oppenheimer downgraded Walmart to Perform from Outperform and removed its $140 price target, citing potential pharmacy-related pressure on US comparable sales.

The firm also described Walmart's valuation as "peakish", warning that a slowdown in comparable sales could leave the shares vulnerable to a lower valuation multiple.

"Although investors in our conversations lately expect a potential Walmart US comp shortfall vs. Street forecasts, we still believe shares could move lower on the print given a still peakish valuation and the potential for pharmacy headwinds to persist at least through Q426," the analysts wrote.

Also, Globalt Investments’ portfolio manager, Keith Buchanan, in an interview with CNBC, said he viewed WMT shares as a “valuation concern” heading into the earnings event.

Walmart raises full-year forecast

Despite the weaker US sales performance, Walmart increased its full-year guidance.

The company now expects fiscal 2027 net sales to rise between 4% and 5%, compared with its previous forecast of 3.5% to 4.5%.

It also raised its full-year adjusted earnings-per-share forecast to between $2.80 and $2.87 from $2.75 to $2.85 previously.

However, Walmart's third-quarter outlook was more cautious.

The company expects adjusted EPS of 62 cents to 64 cents, below analysts' estimate of 68 cents.

Third-quarter net sales are expected to increase between 3% and 3.75%, also below Wall Street's forecast of 4.9%.

E-commerce and advertising remain bright spots

Walmart continues to benefit from businesses outside its traditional store operations.

E-commerce sales increased 24%, while Walmart Connect, its US advertising business, grew 43%.

The company has also lowered prices on more than 7,000 items this year, using higher-margin businesses such as advertising and its third-party marketplace to help protect profitability.

Operating income increased roughly 21% year over year, while gross profit grew 158 basis points.

Walmart said the improvement was driven partly by tariff refunds, although price investments and higher fuel costs offset some of the benefit.

The company said it would continue using tariff refunds to lower prices for customers. Adjusted operating income included a 750-basis-point benefit from the refunds.

Consumer spending becomes the key question

Grocery remained Walmart's strongest merchandising category, recording mid-single-digit growth, while general merchandise, including toys and apparel, grew in the low-single digits.

But the weaker traffic and ticket figures are likely to keep investors focused on whether Walmart can maintain its momentum if consumers become more cautious.

The retailer's decision to raise its annual outlook indicates confidence in the broader business, but the weaker third-quarter guidance suggests the company is preparing for a more challenging near-term environment.

For investors, the immediate question is whether Walmart's growing e-commerce, advertising, and marketplace businesses can offset slower store-based spending and rising costs.

With the stock swinging sharply on the mixed results, many investors are likely to keep a close eye on WMT in the sessions ahead using investment platforms.