Walmart Shares Slide Following U.S. Sales Slowdown
Walmart shares dropped nearly 9% on Thursday, erasing approximately $81.2 billion from the retailer's market capitalization. The sharp decline followed the company's weakest U.S. comparable sales growth in six years, raising concerns among investors regarding consumer demand.
Trading near $104.10 at midday, the stock fell $10.20 from its previous close of $114.30. During the session, the shares touched a low of $102.85, briefly marking a double-digit percentage decline. Based on approximately 7.96 billion outstanding shares, the drop reduced Walmart's market value from roughly $910 billion down to around $829 billion.
Earnings and Revenue Exceed Expectations
The selloff was driven by slowing growth inside core U.S. retail operations and a weaker-than-expected forecast for the current quarter, rather than a miss on earnings or total revenue. Walmart reported quarterly revenue of $187.94 billion—a 5.9% increase year-over-year—beating the roughly $186.82 billion expected by analysts.
Adjusted earnings reached $0.81 per share, surpassing the $0.74 consensus estimate. Operating income rose 28.8% to approximately $9.4 billion, aided by a $2.9 billion tariff refund. However, comparable sales within Walmart U.S. (excluding fuel) grew by only 2.6%, missing the 3.7% to 3.8% growth anticipated by analysts and marking the slowest rate since 2020.
Factors Impacting Performance and Pharmacy Deflation
Customer traffic rose by 1.5%, slowing from 3% in the previous quarter and indicating that recent price reductions have not yet yielded the anticipated surge in shopper growth. Lower prescription drug prices also heavily impacted U.S. performance due to federal Medicare pricing changes. Excluding the health and wellness division, U.S. comparable sales would have been approximately 3.4%.
Additionally, higher fuel prices pressured lower-income households, with management noting that fuel-related expenses are expected to exceed original annual forecasts by over $2 billion. To counteract these pressures, Walmart has cut prices on roughly 11,000 products and plans to utilize the majority of its tariff refund for grocery and merchandise discounts.
Third-Quarter Outlook and Digital Growth
The primary disappointment stemmed from Walmart's third-quarter guidance. The company projects quarterly sales growth between 3% and 3.75%, falling short of the 4.9% expected by Wall Street. Adjusted earnings are anticipated to be between $0.62 and $0.64 per share, compared to analyst expectations of $0.67.
Despite raising its full-year sales growth forecast to between 4% and 5% and increasing adjusted earnings guidance to between $2.80 and $2.87 per share, the midpoint remains below the $2.90 expected by analysts. Meanwhile, digital operations remained strong, with global e-commerce sales increasing 23% and the Walmart Connect advertising business expanding 43%.
Tokenized Stock Sees Sympathy Decline
The downturn extended into the tokenized stock market. Walmart's Ondo tokenized stock, WMTon, traded near $104.79 after dropping 10.7% over a 24-hour period. The token recorded about $692,000 in trading volume with a circulating market capitalization of roughly $2.11 million across approximately 20,146 tokens.
