Walmart (WMT) Q4 FY26 earnings call: guidance and Q&A

How is Walmart thinking about customer traffic, loyalty, advertising, and monetization in the context of rapidly reshaping agentic commerce?

John Furner highlighted Sparky's role in understanding customer intent, generating solutions, and enabling fast delivery, noting a 35% higher average order value for Sparky users. John Rainey added that advertising, up 37% globally, is connecting suppliers with customers effectively. The company sees agentic commerce as a key part of its omnichannel strategy to deliver what customers want, when and how they want it.

“What agentic is doing for us, and we can talk about this in a couple of ways, but I'll talk about Sparky first with our own agentic agent. Sparky is going to be and is fastly becoming as it learns new skills, a way that we can understand customer intent better than we've been able to understand it before, generate solutions for them and then deliver with speed.”

asked by Simeon Gutman · answered by John Furner

How did Walmart factor in potential unanticipated costs into its FY27 outlook, what could they be, and what is the potential upside if they don't occur? Also, quantify the reinvestment embedded in the outlook.

John Rainey stated that the company takes a measured approach to guidance, similar to prior years where they consistently outperformed. While constructive on the economy, they remain balanced due to indicators like subdued consumer sentiment. The guidance assumes flexibility, and while they aim to outperform, they start conservatively given the unstable backdrop. He did not quantify potential upside or reinvestment specifically beyond the capex guidance.

“But I think it's prudent to be somewhat balanced. We are, I think, overall constructive on the economy, but there are certainly indicators out there, whether it be a hiring recession or maybe subdued consumer sentiment, student loan delinquencies, things like that, that would make you want to be more balanced as you sit here at this point in time.”

asked by Michael Lasser · answered by John Rainey

What are Walmart's expectations for inflation/disinflation in its FY27 guide, especially with drug prices coming down?

John Rainey noted Q4 like-for-like inflation was a little above 1%, with food slightly less and general merchandise slightly more. This trend is expected to continue. He highlighted a ~100 basis point headwind for FY27 sales from maximum fair pricing legislation in pharmacy. The company expects price levels to remain generally in the current range and will continue to focus on everyday low prices.

“The most recent quarter, we had like-for-like inflation that was trending a little bit above 1%. That breaks down into food inflation being a little bit less than that, GM inflation being a little bit more than that. That's generally what our outlook is for the next quarter and the balance of the year.”

asked by Gregory Melich · answered by John Rainey

Discuss the outlook for gross margin in FY27, including contribution from mix, and detail inventory management enhancements and regional differences.

John Furner attributed strong inventory management (up 2.6% vs. sales growth) to technology, automation (60% of U.S. stores receiving from automated DCs), and improved seasonal buying. John Rainey added that gross profit is expected to improve in FY27 due to operational benefits and business mix, with advertising and membership income contributing significantly (1/3 of Q4 operating income). SG&A leverage was also achieved in Q4, the first time in a while.

“If I break down the P&L, generally speaking, we're expecting gross profit to improve next year. We're also expecting some leverage in SG&A. And I should pause here for a second. We leveraged in SG&A for the fourth -- this fourth quarter, and that's the first time in a while.”

asked by Kate McShane · answered by John Rainey

Discuss the progression and expected profitability of marketplace and fulfillment services, and whether the company has seen any impact from tax stimulus.

John Rainey stated that marketplace is an area of ongoing investment focused on growth, not immediate profitability, with many categories growing over 40%. Walmart Fulfillment Services is used by 52% of sellers. He confirmed that FY27 guidance includes assumptions for an increase in tax refunds, acknowledging Walmart's sensitivity to these changes, but did not specify the timing or magnitude of consumer spending from these funds.

“Marketplace, I would characterize as an area of ongoing investment. We haven't talked about when we expect that by itself to achieve profitability. This is something that as you think about the 2 legs of growth or profitability, we want to lean a lot more into growth right now. We think that's what's best for our business.”

asked by Christopher Horvers · answered by John Rainey

Update on current eCommerce profitability, the outlook for FY27, and how Walmart plans to sustain share momentum amidst intense competition.

John Rainey stated that eCommerce profitability has far surpassed breakeven, with the U.S. segment profitable in all four quarters and enjoying double-digit incremental margins. He expects this to continue due to the low marginal cost of growth for digital platforms. He emphasized convenience (95% U.S. coverage in 3 hours) and broader assortment (e.g., mid-single-digit fashion growth) as key drivers for sustaining share.

“Ed, we've reached a point where we don't even really talk about this internally anymore. We've far surpassed the breakeven level. We were profitable in each of the 4 quarters in the U.S. segment, and the momentum is only upward from here.”

asked by Edward Kelly · answered by John Rainey

Discuss the health of the U.S. consumer across income cohorts, any holiday surprises, and how GLP-1 users' shopping behavior (frequency, basket size) influences inventory planning.

John Furner reiterated strong growth from households earning over $100,000, while lower-income households (below $50,000) remain stretched. He noted some early Q4 sales impact from government shutdown benefits affecting Walmart U.S. and Sam's. Regarding GLP-1, John Rainey indicated that while fresh items are a big basket driver, the overall impact on growth is a 'wash' due to various puts and takes.

“On GLP-1, I just -- some of the impacts that you -- that we see to our business are as you would expect. So as an example, we see that Fresh is a big driver, one of the big things in baskets. The unique thing about Fresh is that it's a basket driver. When someone buys fresh items, the baskets tend to be larger by a double-digit percentage. So when you take all of the puts and takes related to that, it's kind of a wash. It doesn't really -- isn't a big driver of our growth one way or the other.”

asked by Chuck Grom · answered by John Rainey