ii view: Walmart shares fall as earnings miss forecasts
Selling in the US, Canada, Mexico and China and with AI becoming part of its online customer experience. Buy, sell, or hold?
21st August 2025 15:27
by Keith Bowman from interactive investor
Second-quarter results to 30 June
- Currency adjusted revenue up 5.6% to $177.4 billion (£131 billion)
- Currency adjusted profit up 0.4% to $8 billion (£5.9 billion)
- Adjusted Earnings Per Share (EPS) up 1.5% to $0.68 per share
Guidance:
- Now expects full-year net sales growth of between 3.75% and 4.75%, up from 3-4% previously
- Now expects full-year adjusted earnings of between $2.52 and $2.62 per share, up from $2.50-2.60 previously
Chief executive Doug McMillon said:
“The top-line momentum we have in our business comes from how we’re innovating and executing. Connecting with our customers and members through digital experiences is helping to drive our business, and the way we’re deploying AI will make these experiences even better.
“We’re people-led and tech-powered, and I love how our associates continue to drive change and results for our company.”
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ii round-up:
Walmart Inc (NYSE:WMT) has detailed profits that missed Wall Street forecasts, with the retail mammoth remaining cautious regarding the impact of US trade tariffs.
Currency adjusted second quarter revenue rose 5.6% to $177.4 billion (£131 billion) pushed adjusted earnings 1.5% higher to $0.68 per share. Analysts had forecast outcomes of $176.2 billion and $0.74 per share respectively.
Shares in the Dow Jones company fell 4% in US trading having come into these latest results up by just over a third during the last year. The Dow index is up around a tenth. Rival membership retailer Costco Wholesale Corp (NASDAQ:COST) is up by 12% over that time.
Walmart operates more than 10,700 stores and numerous eCommerce websites in 19 countries. The group’s first profit miss since early 2022 came as the Arkansas headquartered retailer flagged one-time restructuring costs and increased liability claims expenses.
Same store sales for the core US business improved to a gain of 4.6% during the quarter, up from a rise of 4.5% in Q1. Management now expects annual net sales growth of between 3.75% and 4.75%, up from a previous 3-4%.
E-commerce related sales climbed 25% year-over-year with customer demand up across all product segments.
Groupwide full-year earnings are now forecast by management to come in at between $2.52 and $2.62 per share, up from a prior $2.50-2.60.
CEO Doug McMillon highlighted that “middle- and lower-income households have been more sensitive to tariff-related price increases, particularly in discretionary categories.
ii view:
Began in 1962, Walmart today employs over two million people. Selling products ranging from food & drink to clothes, toys and furniture, it serves approximately 270 million customers each week. The core US business generated most sales in 2024 at 82% with overseas operations making up the balance.
For investors, trade tariff uncertainty now raises questions over customer demand going forward given potential further product price rises. Higher shelf prices may increase inflation, leaving interest rates higher for longer. A forecast one-year price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while one-off items such as those for restructuring can affect earnings.
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On the upside, other US retailers will be suffering similar trade related challenges, with Walmart’s size giving it a competitive advantage. A diversity of products and geographical markets exists. Sales at the group’s ecommerce business continue to progress, while the dividend has grown consecutively for more than 50 years, leaving the shares on a forecast yield of around 1%.
In all, and despite ongoing risks, this giant of the retail sector looks to remain worthy of its place in many already diversified investor portfolios.
Positives:
- Ongoing share buybacks
- Focus on customer value
Negatives:
- Uncertain economic outlook
- Subject to currency moves
The average rating of stock market analysts:
Buy
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