Walmart tripped on profit — but still sprinted past its rivals

Walmart still managed to sprint past nearly everyone else despite profits falling this quarter and a rare miss on earnings-per-share, snapping a 12-quarter winning streak. But revenue rose, guidance climbed, and the retail giant once again reminded Wall Street that it’s better at surviving storms than celebrating streaks.

Adjusted earnings came in at 68 cents, short of the 73 cents analysts expected, sending the stock down about 3% in premarket trading. But revenue jumped nearly 5% to $177.4 billion, U.S. comparable sales rose 4.6%, and Walmart raised its full-year forecast for both sales and profit. The picture was less a stumble than a reminder of what makes the company hard to knock over: When profit is pressured by tariffs, labor costs, or insurance claims, Walmart has multiple levers to pull — and it’s not shy about using them.

CEO Doug McMillon acknowledged that tariffs are steadily increasing costs and that the cumulative effect of higher costs is beginning to affect shopping patterns. He said, “As we replenish inventory at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect will continue into the third and fourth quarters.” But he added that, with the way things have played out so far, “the impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted.”

But if tariffs were the headwind, Walmart’s answer was the same tailwind it has relied on for decades: everyday low prices.

“With regard to our U.S. pricing decisions, given tariff-related cost pressures, we’re doing what we said we would do,” McMillon told investors. “We’re keeping our prices as low as we can for as long as we can.” This quarter, his answer — and the company’s — was to lean into the brand’s oldest promise: low prices. In practice, that meant 7,400 “Rollback” discounts during the quarter, a not-so-subtle reminder to shoppers that Walmart intends to be the last place inflation shows up.

McMillon said that shoppers’ spending has “been generally consistent” and that “the impact of tariffs has been gradual enough that any behavioral adjustments… have been somewhat muted.” Still, shoppers overall have been spending somewhat cautiously, leaning toward needs over wants, but tariff-related price increases have caused middle- and low-income shoppers to rein in their spending even more. The pattern is clear: smaller baskets, sharper focus on value, and a consumer leaning harder into Walmart’s core strengths. 

R.J. Hottovy, the head of analytical research at Placer.ai, said Walmart is one of “retail’s winners” during the quarter. He added, “Placer.ai data shows consumers are extremely price-sensitive in 2025, with many retailers who raised prices seeing a negative impact on foot traffic. Walmart’s scale and leverage with suppliers, however, should allow it to manage tariff-related price increases better than its competitors.”

Most retailers would see that as a warning flare. Walmart is treating it as a competitive weapon. Its scale allows it to swallow some of the added costs and still plaster those “Rollback” tags across aisles, daring rivals to keep up. Groceries, memberships, and ads buffer margins, letting Walmart absorb blows others can’t. Ahead of the earnings report, Jefferies’ Corey Tarlowe described those share gains as “durable momentum,” pointing out that tariffs may nick profits but also accelerate the company’s ability to pull traffic away from mid-tier competitors.

But those rollbacks weren’t a magic trick. Groceries and health products carried the quarter, providing steady traffic while more discretionary categories lagged. Membership income climbed more than 5%, helping pad recurring revenue. E-commerce surged 26% in the U.S. and 25% globally, with store-fulfilled delivery now accounting for nearly half of the company’s growth. Advertising revenue — the kind of high-margin side hustle that most retailers dream about — jumped 46% worldwide. 

Chief financial officer John Rainey described the quarter as one of quiet share gains with growth across all income cohorts in the quarter. He stressed that inventory levels remain healthy enough to keep the company nimble in a shifting economy.

Analysts largely sided with management’s framing. JPMorgan said the report doesn’t fundamentally change its positive outlook on the stock. Wall Street wants to know how long Walmart can keep absorbing costs before it feels the pinch, yet the stock largely remains rated a “Buy.” With analysts calling out its pricing power, Walmart has turned tariffs into both a moat and a marketing message; higher costs may be a storm, but it's one the company seems built to weather better than anyone else. The quarter may have ended Walmart’s EPS streak, but it didn’t change the story.

The contrast with rivals only sharpens that point. Target, once seen as Walmart’s trendier twin, has been struggling with slower foot traffic and tariff exposure in apparel and home goods. Home Depot and Lowe’s are contending with stalled home-improvement spending. Even Costco, whose membership model is its shield, has seen sales growth flatten as households stretch their budgets.

What ties the sector together is a pivot to more resilient revenue streams: loyalty programs, advertising, and delivery services. But where others are experimenting, Walmart is scaling. With more than 90% of U.S. households shopping at its stores each year, the company has a platform that can turn side bets into profit engines. Its ad business now looks less like a pilot project and more like a media arm. Its e-commerce growth suggests it’s no longer just chasing Amazon but carving out a different model, with stores doubling as fulfillment hubs and groceries anchoring digital loyalty.

That’s why the market’s fixation on the earnings miss may seem out of step with the substance of the quarter. Profits slipped. But sales rose, forecasts climbed, customers kept coming, and Walmart kept widening the gap with peers. For most retailers, a 3% dip in premarket trading would sting. For Walmart, it was almost comic relief — a reminder that even when it trips, it keeps outpacing the field.