Walmart Q4 FY26 earnings call WMT

Walmart's omnichannel model, integrating stores, clubs, distribution centers, fulfillment centers, and last-mile delivery networks, is driving strong results. eCommerce sales grew 24% globally in Q4 FY26, exceeding $150 billion for the first time in FY26, and now represent 23% of sales mix, up 550 basis points in two years. This strategy enables faster delivery, with 35% of Walmart U.S. store-fulfilled orders delivered in under 3 hours, and Flipkart delivering orders in less than 15 minutes across over 30 cities in India.

The company is actively embracing AI, developing tools like Sparky, a shopping assistant that helps understand customer intent and generate solutions. Customers engaging with Sparky show an average order value 35% higher than non-Sparky users, and engagement is up significantly, with roughly half of app users engaging with Sparky. Partnerships with OpenAI and Alphabet are also shaping future agentic commerce experiences, aiming to connect digital intent to physical fulfillment.

Operating income growth is outpacing sales, driven by improved eCommerce economics and increased contributions from higher-margin areas like advertising and membership fees. Advertising businesses globally grew 37% in Q4 FY26 (Walmart Connect U.S. up 41%), reaching $6.4 billion for FY26. Consolidated membership income increased over 15% in Q4 FY26, exceeding $4.3 billion for FY26. These 'alternate profit pools' represented nearly one-third of operating income this quarter, demonstrating the benefits of diversified profit streams.

Significant improvements in inventory management are contributing to profitability, with inventory growing at 2.6% in constant currency, approximately half the rate of sales growth for FY26. This efficiency is supported by technology, AI, and automation in stores, clubs, and supply chain, with approximately 60% of Walmart U.S. stores receiving freight from automated distribution centers and 50% of eCommerce fulfillment center volume being automated. These efforts lead to fewer markdowns and improved labor productivity.

Spending remains resilient across customer segments, with the majority of share gains coming from households earning over $100,000. Walmart is strategically leaning into lower prices through rollbacks and Everyday Low Price (EDLP) in grocery categories to help customers unlock purchasing power for general merchandise. This strategy has led to low single-digit growth in general merchandise for Walmart U.S., led by fashion, and 6,200 rollbacks in Q4 FY26, up 23% from a year ago.

Walmart is aligning globally to leverage common platforms in tech, AI, and digital businesses, adopting a 'build one, scale globally' approach. This is expected to drive faster innovation, lower costs, ensure consistency, and result in growth at a much lower marginal cost. The company remains disciplined in its capital allocation, with FY27 capital expenditure levels expected to be approximately 3.5% of sales, focusing on investments that provide strong returns, such as supply chain automation and store remodels.