Walmart’s Comp Held Steady for Nine Quarters. The Walk-In Portion of It Went Negative.

Walmart reported second quarter results on August 20. Total revenue of $187.9 billion, up 5.9 percent. Operating income of $9.4 billion, up 28.8 percent. Global eCommerce up 23 percent. Global advertising up 38 percent. Membership fee revenue up 17 percent. Return on investment at 15.4 percent. Guidance raised for the full year on sales, operating income, and earnings per share.

Comparable sales at Walmart U.S., excluding fuel, grew 2.6 percent against 4.6 percent a year ago. Shares fell roughly 9 percent in Thursday trading, according to CNBC, and NBC News reported the stock sitting more than 20 percent below its May high.

Walmart Publishes Both Numbers and Leaves the Subtraction to the Reader

The quarterly financial presentation reports that comp figure alongside a second line labeled eCommerce contribution to comp, expressed in basis points. Both appear in every release. Subtracting the second from the first leaves the portion of comparable sales that came from somewhere other than eCommerce. That remainder is not published. The arithmetic below is ours, performed on the company’s disclosed figures.

Walmart U.S., ten quarters, comp and eCommerce contribution as reported by Walmart:

Q1 FY25: comp 3.8%, eCommerce 280 bps, remainder +1.0
Q2 FY25: comp 4.2%, eCommerce 300 bps, remainder +1.2
Q3 FY25: comp 5.3%, eCommerce 290 bps, remainder +2.4
Q4 FY25: comp 4.6%, eCommerce 290 bps, remainder +1.7
Q1 FY26: comp 4.5%, eCommerce 350 bps, remainder +1.0
Q2 FY26: comp 4.6%, eCommerce 420 bps, remainder +0.4
Q3 FY26: comp 4.5%, eCommerce 440 bps, remainder +0.1
Q4 FY26: comp 4.6%, eCommerce 520 bps, remainder -0.6
Q1 FY27: comp 4.1%, eCommerce 530 bps, remainder -1.2
Q2 FY27: comp 2.6%, eCommerce 510 bps, remainder -2.5

What that remainder does not measure is worth settling before going further. Store-fulfilled pickup and delivery sits inside Walmart’s eCommerce definition. When a customer who used to walk the aisles switches to a pickup order, the same items leave the same shelf in the same building, the sale moves out of the remainder and into the eCommerce line, and total comp does not move at all. The remainder tracks how customers acquire goods, not how much physical volume passes through stores. Physical volume is up. Walmart U.S. net sales grew 3.5 percent in the quarter, transactions grew 1.5 percent, and the company reports growth in unit volumes. What has been falling is the share of comparable sales that comes from a shopper selecting the item personally, which this article calls the walk-in portion.

That walk-in portion peaked in the third quarter of fiscal 2025 and has declined in each of the seven quarters since. It crossed below zero in the fourth quarter of fiscal 2026, the comp period ending January 30 of this year. Across the nine quarters from Q1 FY25 through Q1 FY27, reported comp never left a band between 3.8 and 5.3 percent while the composition underneath it inverted. Fiscal 2025 carried a 53rd week, and because the company states that its comparable sales calculations use periods of equal length and that recasting would be inconsequential, the fourth quarter of fiscal 2025 sits in the series on the same basis as the rest.

The second quarter print did not begin the trend. It removed what had been obscuring it, which was pharmacy.

The company attributes roughly 125 basis points of Q2 comp headwind to deflation tied to maximum fair price regulation that took effect January 1, and reports a roughly 900 basis point negative impact from that deflation inside health and wellness specifically. The scale of the swing is easier to see across two years. In the first quarter of fiscal 2026, health and wellness comped up high teens on script growth and a higher mix of branded versus generic sales. In the second quarter of fiscal 2027, the same category comps down low single digits. Fiscal 2027 comps also carry roughly a 50 basis point tailwind from GLP-1 medications, against roughly 100 basis points in each of the two prior fiscal years.

The company makes the fair counterargument in its own materials. On a basis excluding health and wellness, second quarter comp was 3.4 percent, higher than the 3.1 percent reported for the same quarter a year ago. That comparison holds, and it does not account for the slope of the walk-in line. Maximum fair price took effect on January 1, inside the fourth quarter of fiscal 2026. By the close of the preceding quarter, with the regulation not yet in force, the walk-in portion had already fallen through four consecutive quarters, from a peak of positive 2.4 to positive 0.1. Add the full 125 basis point pharmacy headwind back to the reported 2.6 percent and comp becomes roughly 3.85 percent, still well below the 510 basis points eCommerce contributed. Health and wellness explains the depth of the second quarter step down. The four quarters of decline that preceded the regulation sit outside its reach.

Sam’s Club Crossed the Same Line One Quarter Earlier and Then Flattened

Sam’s Club U.S. reached a negative walk-in portion in the first quarter of fiscal 2027, one quarter ahead of Walmart U.S. Running the same subtraction, using comp excluding fuel and the eCommerce contribution excluding fuel reported beside it:

Q1 FY25: comp 4.4%, eCommerce 180 bps, remainder +2.6
Q2 FY25: comp 5.2%, eCommerce 230 bps, remainder +2.9
Q3 FY25: comp 7.0%, eCommerce 290 bps, remainder +4.1
Q4 FY25: comp 6.8%, eCommerce 280 bps, remainder +4.0
Q1 FY26: comp 6.7%, eCommerce 350 bps, remainder +3.2
Q2 FY26: comp 5.9%, eCommerce 350 bps, remainder +2.4
Q3 FY26: comp 3.8%, eCommerce 330 bps, remainder +0.5
Q4 FY26: comp 4.0%, eCommerce 380 bps, remainder +0.2
Q1 FY27: comp 3.9%, eCommerce 400 bps, remainder -0.1
Q2 FY27: comp 4.4%, eCommerce 450 bps, remainder -0.1

The club crossed first and then held. Its walk-in portion sat at negative 0.1 in both Q1 and Q2 of fiscal 2027 while total comp improved from 3.9 percent to 4.4 percent, which is a different trajectory from the one Walmart U.S. is on and worth watching as a possible floor.

Two segments with different formats, different membership economics, different merchandising organizations, and materially different pharmacy exposure arrived within a quarter of each other. The presentation puts the maximum fair price impact inside Sam’s health and wellness at roughly 600 basis points against roughly 900 at Walmart U.S., and the pharmacy drag on Sam’s total comp at roughly 40 basis points against 125.

Second quarter transaction data at Sam’s describes the substitution at member level. Transactions excluding fuel grew 7.0 percent while average ticket excluding fuel fell 2.5 percent. Club-fulfilled delivery produced triple digit growth, eCommerce reached roughly 20 percent of net sales excluding fuel, up around 350 basis points, and Scan and Go adoption rose roughly 110 basis points. Even the in-club trip is being intermediated, since a Scan and Go basket bypasses the checkout lane entirely.

Walmart U.S. Opened One New Store Last Quarter and Grew Store-Fulfilled Delivery 43 Percent

The company opened one new Neighborhood Market in Walmart U.S. during the second quarter and completed roughly 220 store remodels. Across the same three months, the financial presentation reports store-fulfilled delivery up roughly 43 percent, with expedited deliveries arriving in under three hours representing about 37 percent of store-fulfilled orders. Segment eCommerce grew 24 percent, marketplace sales grew 52 percent, and Walmart+ net adds hit a record second quarter high.

Year to date the segment has opened three Supercenters, one Neighborhood Market, and completed roughly 280 remodels. The remodel pace has moved sharply, from roughly 40 in the first quarter of fiscal 2026 to roughly 220 in this quarter. Walmart International, by comparison, opened 206 new stores over the trailing twelve months.

A retailer adding almost no new domestic square footage, remodeling at a sharply higher rate, and growing store-fulfilled delivery at 43 percent is not managing a declining asset. It is converting a selling floor into a fulfillment network that also sells, and putting its domestic capital into the conversion instead of into new buildings. The economics appear where you would expect: Walmart U.S. operating income grew 20.6 percent on 3.5 percent segment net sales growth, and the segment operating income rate expanded 92 basis points to 6.5 percent.

Furner described the strategic logic on the earnings call. According to a transcript published by Investing.com, Walmart’s president and chief executive officer said that speed “is not simply a fulfillment metric, it is an acquisition strategy,” and told analysts that customers who use fast delivery shop more often, engage more deeply, and are more likely to become Walmart+ members. Read against the walk-in line, that is a description of a migration the company is deliberately encouraging.

The consequence for a supplier follows directly from the substitution. A unit picked from the shelf by an associate filling a delivery order and a unit picked by a shopper both move through the same modular, and both land in the same segment sales figure. Only one of them passed a display, an endcap, a shelf talker, or a secondary placement. The associate did not. Whatever a brand spends on in-store merchandising is therefore working on a share of Walmart U.S. volume that has been contracting for seven quarters, and brand teams should size that share against their own channel data before setting the next trade calendar.

Strip Out the Tariff Refund and Profit Still Grew Twice as Fast as Sales

Underlying adjusted operating income grew at roughly twice the rate of net sales in the second quarter with no help from the tariff refund, which is the figure the reported 28.8 percent obscures in both directions.

Nearly $2.9 billion in IEEPA tariff refunds arrived during the quarter. Those refunds are the largest single reason consolidated gross profit rate expanded 96 basis points to 25.4 percent and Walmart U.S. gross profit expanded 158 basis points. The company’s own second quarter summary discloses that adjusted operating income growth in constant currency of roughly 17 percent included a 750 basis point net benefit from the refunds, and that setting the benefit aside, underlying growth landed at the top end of the 7 to 10 percent guidance range.

Remove 750 basis points from 17.4 percent and underlying adjusted operating income growth in constant currency comes to roughly 10 percent, against net sales growth of 5.0 percent in constant currency.

The businesses producing that spread are the ones suppliers and sellers fund directly. Global advertising grew 38 percent, with Walmart Connect in the U.S. up 43 percent excluding VIZIO and Walmart International advertising up 20 percent led by Flipkart Ads. Membership fee revenue grew 17 percent globally. Membership and other income grew 11.2 percent. Adjusted EBITDA margin expanded roughly 70 basis points to 7.2 percent. For scale on what that mix now carries, Rainey told analysts on the February call that advertising income and membership fees together represented nearly one third of Walmart’s operating income in the fourth quarter.

Third Quarter Profit Is Guided to Grow Slower Than Sales, on Purpose

For the third quarter, the company guided net sales growth of 3.0 to 3.75 percent and adjusted operating income growth of 2.0 to 4.0 percent, both in constant currency. Across most of those ranges, profit is guided to grow slower than sales, which inverts the framework the company has been reporting against. On the February call, Rainey noted that fiscal 2026 was the third consecutive year Walmart grew profits faster than sales.

The reason is disclosed. John David Rainey, Walmart’s executive vice president and chief financial officer, said the operating income outlook reflects continued prioritization of the tariff refunds into customer experience and price investments in the second half, and asked investors to “consider Q2 and Q3 performance together to assess the underlying growth of the business.”

The second quarter summary puts the deployment in operational terms. The Walmart U.S. team delivered more than 11,000 rollbacks during the quarter, and the company describes the refunds as having been prioritized into price during the period. That count has escalated quickly. On the fourth quarter call in February, Furner put Walmart U.S. rollbacks at 6,200 for that quarter, up about 23 percent year over year.

The read for 1P suppliers is specific. The retailer enters the back half with a price posture funded by a government refund already in hand, having told its investors it will accept slower profit growth for a quarter to deploy it. Rollback pressure, basket comparisons, and opening price point conversations arriving in the third and fourth quarters are not evidence of a gap in the merchant’s plan, because the plan already contains the money. Suppliers who hold cost and bring incremental Connect commitment, Walmart+ promotional participation, or marketplace assortment to the conversation are trading in the currency the merchant’s operating income is actually denominated in.

Countervailing pressure is real. Rainey told CNBC that the company expects just over $2 billion in incremental cost headwinds this year tied to higher fuel prices. Gross profit in both U.S. segments was partly offset by higher fuel costs in distribution and fulfillment, and the Walmart U.S. operating expense rate rose 72 basis points on higher claims expense, depreciation, and associate healthcare costs. Those are supply chain, insurance, and benefits costs, which is a different problem from the one a cost-of-goods concession solves.

Marketplace Grew 52 Percent and Half of It Now Runs Through Walmart’s Own Fulfillment

The largest growth figure disclosed for the Walmart U.S. segment was neither eCommerce nor advertising. Marketplace sales grew 52 percent, with growth above 40 percent in categories including hardlines and home, and particular strength in furniture.

Two disclosures around that figure carry more weight than the figure itself. Nearly 50 percent of the marketplace business flowed through Walmart’s fulfillment services during the quarter. The marketplace platform also expanded into markets outside the U.S., and Walmart.com opened to international customers with shipping available to Mexico.

For 3P sellers, the fulfillment services number describes a platform now roughly half vertically integrated on logistics. The release separately attributes part of the Walmart U.S. operating income growth to improved eCommerce economics. Sellers should read those two disclosures together and assume that fulfillment services penetration is being managed as an economic priority in its own right. A seller evaluating WFS against per-unit fulfillment cost alone is evaluating one side of a decision now bundled with delivery speed promises, search treatment, and promotional eligibility.

For 1P suppliers, the 52 percent figure is a competitive fact before it is a channel fact. In categories including hardlines and home, marketplace sales are growing at more than ten times the rate of the segment. A line review conversation about shelf space in those categories is happening inside a digital assortment where third party sellers are growing faster than the business around them. The question is no longer only what share of the modular a brand holds. It is what share of the search result page it holds against sellers who were not in the category two years ago.

Capital Spending Moved Past the Peak Walmart Named in February

Fiscal 2027 capital expenditure guidance moved from approximately 3.5 percent of net sales to approximately 4.0 percent. When Rainey set that 3.5 percent figure on the fourth quarter call in February, he described the company as “hitting the peak of annual spending levels on supply chain automation” and store remodels. Six months later the figure went up. Fiscal 2026 had been guided at approximately 3.0 to 3.5 percent of net sales, so the trajectory now runs through three guidance points in one direction and past the ceiling management named.

The cash statements show the ramp. First half capital expenditures reached $14.2 billion, an increase of $2.8 billion year over year. Free cash flow for the half fell $1.4 billion to $5.5 billion even as operating cash flow rose $1.4 billion. Depreciation and amortization ran $3.9 billion for the quarter against $3.5 billion a year ago, and the presentation names higher depreciation among the reasons U.S. operating expenses rose faster than sales. Return on assets declined 30 basis points to 8.0 percent, which the company attributes partly to higher purchases of property and equipment, while return on investment rose 30 basis points to 15.4 percent.

What the money has bought so far has been described in pieces. On the first quarter call in May, Rainey put approximately 60 percent of Walmart U.S. stores as receiving some freight from automated distribution centers and approximately 50 percent of eCommerce fulfillment center volume as automated, tying both to inventory visibility and labor productivity. On the second quarter call he put the store count at roughly 3,100. The company has not detailed how the incremental capital breaks down beyond describing it as support for the omnichannel growth strategy. Supply chain teams should treat the rising percentage as a planning input in its own right, on the reasoning that network build decisions made at 4.0 percent of net sales tend to reach suppliers later as specification and compliance requirements.

U.S. Inventory Is Growing at Nearly Twice the Rate of U.S. Sales

Walmart U.S. inventory rose 6.3 percent in the quarter against segment net sales growth of 3.5 percent. Globally, inventory closed at $61.6 billion, up 6.7 percent, or 6.0 percent in constant currency, against net sales growth of 5.9 percent. Sam’s Club inventory rose 8.0 percent, which the release attributes largely to fuel costs, volumes, and fuel upstreaming with a strategic partner. Walmart International, by contrast, reports inventory growing at approximately half the rate of sales.

The company attributes the U.S. build to strategic initiatives and inflation, and nothing in the disclosures suggests distress. Inventory positioned ahead of an automation ramp or a holiday plan looks like this on a balance sheet.

It is still a condition worth modeling alongside the back half price posture. A segment carrying inventory growth at nearly twice its sales growth, entering two quarters in which the retailer has committed to deploying a refund into price, gives merchants more reason to open markdown, promotional funding, and event participation conversations than they would have in a cleaner inventory position. Suppliers with seasonal or fashion exposure in general merchandise should have that scenario costed before the request lands.

The Next Reading Sits on the Same Slide

The strategy here was disclosed on schedule. Mix shift toward advertising, marketplace, fulfillment services, and membership is generating operating income growth at roughly twice the rate of sales even after the refund is removed. Stores are being rebuilt into the delivery network that makes the digital business work. Capital keeps flowing into that conversion. None of it is hidden, and none of it positions Walmart against its suppliers.

What the second quarter adds is a measurement of the channel most supplier plans are still built to influence. Shoppers are still buying, and they are buying more units than a year ago. Fewer of them are selecting those units off a shelf, and that share has shrunk in each of the last seven quarters. Trade dollars aimed at the moment of shelf selection are chasing a narrowing slice of the same growing business.

Walmart’s third quarter comparable sales period ends October 30. When those results are reported, the same two lines will appear in the same place in the same presentation, covering a quarter in which the company has told investors it is spending a tariff refund on price. Whether the walk-in portion stabilizes the way Sam’s has, or extends the run to eight, is the figure to read first.

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