Walmart Earnings Beat Falls Flat on Tariff Refund Worries
Walmart's (NYSE: WMT) recent earnings report was met with a shocking decline of 9% in stock price, despite beating expectations and raising full-year guidance. This reaction is the worst in Walmart's last ten reported quarters.
The company reported adjusted EPS of $0.81, surpassing the consensus estimate of $0.7413 on revenue of $187.94 billion, a 6% year-over-year increase. Management also lifted FY27 outlook for adjusted EPS to $2.80 to $2.87 and constant currency sales growth to 4.0% to 5.0%
However, the market disagreed with this positive news, citing concerns over tariff refunds and investments in price rollbacks. CFO John David Rainey explained that a significant portion of the tariff refunds was invested at the end of Q2, which had a pronounced impact on Q3 guidance.
The company's Q3 guidance came in soft, with adjusted EPS of $0.62 to $0.64 and net sales growth of 3.0% to 3.75% in constant currency. The decline in stock price was further exacerbated by the optics of Walmart repurchasing shares at an average price of $117.61, only to see the market value drop to $103.84.
Target (NYSE:TGT) had a similar experience with tariff refunds, but its shares rose instead of falling. This contrast highlights the complexities and challenges facing retailers in today's market.