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    WMT
    Earnings call· Oct 2025(Q3 FY26)

    Walmart Inc. WMT

    Nov 20, 2025 Source

    Executive summary

    Walmart Q3 FY26 — Strong Sales & Profit Growth, E-commerce Momentum, and Share Gains

    Walmart delivered strong Q3 FY26 results, driven by robust sales and profit growth across all segments, significant e-commerce momentum, and market share gains, particularly among higher-income households. The company is leveraging its omnichannel model and technology, including AI, to enhance efficiency and customer experience, while navigating a dynamic consumer environment with disciplined cost control and strategic pricing.

    Highlights

    5

    • Consolidated sales grew 5.9% in constant currency, exceeding expectations.

    • Adjusted operating income grew 8% in constant currency, outpacing sales growth.

    • E-commerce sales were a highlight, up 27% overall, with each segment delivering growth above 20%.

    • Global advertising revenue increased 53%, and membership income was up 17% across the enterprise.

    • International segment drove strongest performance with 11.4% sales growth and 16.9% adjusted operating income growth in constant currency.

    Concerns

    3

    • Merchandise category mix remains a headwind to gross margin, as sales growth in grocery and health & wellness outpaced general merchandise.

    • Some moderation in spending was observed in lower-income households, consistent with broader macro trends.

    • Maximum fair pricing legislation going into effect in January 2026 is expected to influence the health and wellness business comp.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full year sales growth (constant currency)
    4.8% to 5.1%
    high materiality
    High
    Full year operating income growth (constant currency)
    4.8% to 5.5%
    high materiality
    High
    Q4 sales growth (constant currency)
    3.75% to 4.75%
    medium materiality
    High
    Q4 operating income growth
    8% to 11%
    medium materiality
    High
    Full year adjusted EPS
    $2.58 to $2.63
    high materiality
    High
    Q4 adjusted EPS
    $0.67 to $0.72
    medium materiality
    High
    Currency benefit to Q4 reported sales growth
    $1.1 billion
    low materiality
    High
    Currency benefit to Q4 reported operating income growth
    100 basis point
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    International
    Strongest performance across segments, benefiting from business mix changes and lower e-commerce losses. Transaction counts and unit volumes are up, and market share is being gained.
    E-commerce sales: up 26%Flipkart Big Billion Days event: record executionChina e-commerce penetration: 50%Digital orders in China delivered in under an hour: 80%Sam's Clubs in China: 60Membership income growth: 34%
    		—11.4% in constant currency—adjusted operating income grew 16.9%
    Walmart U.S.
    Delivered strong comp sales and e-commerce growth, driven by value proposition and healthy transaction/unit volumes. Fashion, home, and automotive led general merchandise growth. Grocery performed well with good unit growth.
    E-commerce growth: 28%Marketplace sales growth: 17%Digital orders delivered in under 3 hours: 35%Like-for-like inflation: 1.3%Active rollbacks: 7,400Inventory increase: 2.6%
    		—comp sales of 4.5%—mid-single-digit growth
    Sam's Club U.S.
    Comp sales driven by transaction counts and market share gains in grocery and general merchandise. Digital engagement continues to increase, with strong e-commerce performance and enhanced member benefits.
    E-commerce sales growth: 22%Member count: good growthRenewal rates: good growthPlus member penetration: good growthScan & Go adoption: 36% (up 450 bps YoY)Club-fulfilled delivery growth: triple digitsMembership income growth: 7%
    		—comp sales of 3.8%—mid-single-digit growth

    Operational metrics

    31
    Consolidated sales growth
    5.9%YoY
    Q3 FY26

    Overall sales growth for the company.

    Consolidated adjusted operating income growth
    8%YoY
    Q3 FY26

    Adjusted operating income grew faster than sales.

    Consolidated e-commerce sales growth
    27%YoY
    Q3 FY26

    Strong e-commerce performance across all segments.

    Global advertising growth
    53%YoY
    Q3 FY26

    Significant growth in advertising revenue.

    Global membership income growth
    17%YoY
    Q3 FY26

    Membership income contributing to diversified profit streams.

    Walmart Connect (U.S. ex VIZIO) advertising growth
    33%YoY
    Q3 FY26

    Growth driven by increasing advertiser counts, including third-party marketplace.

    International advertising growth
    34%YoY
    Q3 FY26

    Strong advertising growth in international markets.

    Walmart+ membership income growth
    double-digit pace
    Q3 FY26

    Membership income continued to grow, with Q3 net adds being the strongest on record.

    Consolidated gross profit
    relatively flatYoY
    Q3 FY26

    Gross profit remained stable year-over-year.

    Walmart U.S. gross profit increase
    19 bps
    Q3 FY26

    Gross profit improved in the U.S. segment.

    E-commerce fulfillment center volume automation
    more than 50%
    Q3 FY26

    Automation driving better unit productivity and lower cost to serve.

    Shipping costs improvement
    double-digit improvements
    Q3 FY26

    Consistent reduction in shipping costs for many quarters.

    Adjusted EPS
    $0.62up nearly 7%
    Q3 FY26

    Adjusted EPS was slightly better than expected.

    PhonePe charge
    $700 million
    Q3 FY26

    Impacted GAAP results and slightly declined reported ROI.

    Total company inventory increase
    3%
    Q3 FY26

    Inventory levels increased despite higher costs from tariffs.

    Year-to-date capital returned to shareholders
    $13 billion
    YTD Q3 FY26

    Significant capital returned to shareholders.

    AI-generated or AI-assisted code
    more than 40%
    Q3 FY26

    AI is being used to enhance efficiency in software development.

    Walmart U.S. stores receiving freight from automated DCs
    more than 60%
    Q3 FY26

    Investments in supply chain automation are progressing.

    Sam's Club U.S. 2-year comp stack
    around 11%
    Q3 FY26

    Underlying momentum for Sam's Club U.S. when accounting for prior year lapping effects.

    Walmart U.S. fashion category growth
    over 5%
    Q3 FY26

    Fashion was a bright spot in general merchandise.

    Walmart U.S. health and wellness sales growth
    low double digits
    Q3 FY26

    Strong performance in health and wellness.

    Walmart U.S. active rollbacks
    7,400
    Q3 FY26

    Strategic pricing actions to reinforce value.

    Walmart U.S. rollbacks becoming new EDLP
    more than 2,000
    since beginning of year

    Rollbacks often lead to permanent price reductions.

    Walmart U.S. Thanksgiving meal basket cost
    less than $40
    Q4 FY26

    Example of value offering for the holiday season.

    Walmart U.S. Butterball turkey price
    $0.97 per poundlowest price since 2019
    Q4 FY26

    Aggressive pricing on key holiday items.

    Walmart U.S. VIZIO television price
    $128
    Q4 FY26

    Example of value offering on general merchandise.

    International e-commerce losses
    lower
    Q3 FY26

    Improved e-commerce economics contributing to segment profitability.

    Sam's Club U.S. Curbside Pickup increase after minimum reduction
    20%+
    Q3 FY26

    Reduced basket minimums for Curbside Pickup led to increased adoption.

    Sam's Club U.S. delivery growth
    triple-digit growth
    Q3 FY26

    Strong growth in delivery services for Sam's Club.

    Marketplace growth (automotive, toys, electronics, apparel)
    north of 40%YoY
    Q3 FY26

    Strong growth in specific marketplace categories.

    Marketplace SKUs
    $500 million or north of
    Q3 FY26

    Focus on ensuring a broad and complete assortment through the marketplace.

    Industry KPIs

    8
    MetricValueDetails
    Sg a rateleveraged slightly
    Marketplace 3p GMV17%%
    Gross margin driversrelatively flat
    Warehouse store club count60clubs
    Comparable same store sales4.5%%
    E commerce digital sales growth27%%
    Advertising retail media revenue53%%
    Category level comps and inflation deflation1.3%%

    Product announcements

    1
    ProductTypeDetails
    OpenAI Partnership for Shoppinglaunch

    Deals & partnerships

    1
    OpenAIIntegration of shopping capabilities into ChatGPT

    Partnership to enable direct purchasing from Walmart and Sam's Club through ChatGPT, aiming for more immersive and connected customer experiences. This is part of Walmart's strategy to leverage AI for personalized and contextual e-commerce.

    Risks & headwinds

    5
    Merchandise category mix headwindQ3 FY26, Q4 FY26

    Merchandise category mix in Walmart U.S. remains a headwind as sales growth in grocery and health and wellness outpaced general merchandise.

    Mitigation: Walmart is doing the things that it can to influence this, but it is largely a macro phenomenon reflecting consumer shift to necessities over discretionary items.

    Moderation in spending by lower-income householdsQ3 FY26, ongoing

    Lower income families have been under additional pressure of late, with some moderation in spending in this cohort. The disparity in wage growth between cohorts was as large as it's been in almost a decade.

    Mitigation: Meeting them with greater value across necessities and helping them stretch their dollars further. Walmart's value proposition makes it better insulated than competitors.

    Maximum fair pricing legislation impact on health and wellness businessJanuary 2026

    Will influence the comp in January a little bit. It's premature to give a specific number on the impact.

    Mitigation: Overall, the health and wellness business is still expected to continue to grow, as it has been a strong growth driver.

    Tariffs and higher costsFY26

    Higher costs from tariffs. 150 basis points of headwinds from the VIZIO acquisition and lapping leap year as well as higher-than-expected claims expense.

    Mitigation: Team has managed through tariffs impressively by managing inventory, price gaps, and improving mix with strong categories like fashion. Appreciation for relief on non-U.S. grown items.

    Commodity price inflation (beef)ongoing, take a bit longer to work out

    Price pressure that we're seeing in food generally right now is in the beef category, largely a reflection of commodity and cyclical nature of herd sizes.

    Mitigation: Team has done a nice job creating great value on particular items, like Thanksgiving turkeys, to offset other pressures.

    What to watch in Q4 FY26

    5

    Impact of maximum fair pricing legislation on Health & Wellness sales

    Q4 FY26 / Q1 FY27
    Currentwill influence the comp in January a little bit
    Targetquantified impact on sales and comp

    Why it matters

    This legislation could impact a key growth driver for Walmart, and its quantification will be important for future guidance.

    The maximum fair pricing legislation that was enacted and goes into effect in January will affect our health and wellness business, specifically our pharmacy business. That will influence the comp in January a little bit, but all in, if you look at our revenue guidance, it's very much in line with the first part of the year.

    Q&A highlights

    6

    Will agentic AI supercharge Walmart's e-commerce growth, leveraging unique advantages, and what is the Q4 consumer outlook?

    Management expressed excitement about agentic AI, highlighting Walmart's broad assortment, proximity to customers, EDLP, and physical assets as unique advantages. They detailed Sparky's role in personalization and inventory management, and noted trials like Carrito Listo in Chile. For Q4, the consumer environment is consistent, with some moderation in lower-income spending, but holiday shopping is off to a good start.

    “I think the advantages that we have include our breadth of assortment being so close to people, which will help us with delivery speed and, of course, everyday low prices, but I wouldn't underestimate the physical aspects that kind of underpin the advantages that we have.”

    asked by Simeon Gutman · answered by Doug McMillon

    2 min read6 chapters

    Detailed Narrative

    01

    Leadership Transition and Strategic Continuity

    Doug McMillon announced his transition from CEO, with John Furner set to take over on February 1, 2026. Both leaders expressed strong confidence in the company's future and the continuity of its strategic direction. Furner, a 32-year Walmart associate and current Walmart U.S. CEO, emphasized his long-standing involvement in developing the company's capital allocation, automation, and omnichannel strategies, ensuring a disciplined approach to investments and focus on shareholder returns.

    02

    Omnichannel and Digital Acceleration

    Walmart continues to drive significant e-commerce growth, with overall sales up 27% and Walmart U.S. e-commerce up 28%. This growth is fueled by enhanced delivery speeds, with 35% of Walmart U.S. digital orders delivered in under 3 hours, and a focus on broader assortment. The company is leveraging AI to create more personalized, multimodal, and contextual shopping experiences, including a new partnership with OpenAI to enable direct purchases through ChatGPT, starting with checkout and evolving into more integrated experiences.

    03

    Market Share Gains Across Income Cohorts

    Walmart reported gaining market share in both grocery and general merchandise, including fashion, home, and automotive categories. The company observed strong growth across all income cohorts, particularly benefiting from higher-income households shopping more frequently. While lower-income families are experiencing pressure, Walmart is addressing this by offering greater value through initiatives like 7,400 active rollbacks, with over half in grocery, and strategic pricing on holiday essentials.

    04

    Efficiency and Cost Management Through Automation

    Disciplined inventory management and strategic cost control are key priorities. Over 60% of Walmart U.S. stores now receive freight from automated distribution centers, and more than 50% of e-commerce fulfillment center volume is automated. These investments are driving improved unit productivity and lowering the cost to serve, contributing to double-digit improvements in shipping costs and overall SG&A leverage. AI is also being used for software development, with over 40% of new code being AI-generated or assisted.

    05

    Growth of High-Margin Businesses

    High-margin revenue streams, including advertising and membership fees, are increasingly contributing to operating income, collectively representing approximately one-third of consolidated adjusted operating income. Global advertising grew 53%, with Walmart Connect (U.S. ex-VIZIO) up 33% and International advertising up 34%. Enterprise-wide membership income increased 17%, driven by 34% growth in International and double-digit growth for Walmart+, which saw its strongest net additions on record in Q3.

    06

    International Segment Outperformance

    The International segment delivered strong top and bottom-line performance, with 11.4% sales growth and 16.9% adjusted operating income growth in constant currency. This was supported by business mix changes, lower e-commerce losses, and strong market execution in regions like India (Flipkart's record Big Billion Days event) and China (50% e-commerce penetration, 80% of digital orders delivered in under an hour). The segment's digital penetration is nearly one-third of its total business.

    AI-generated summary of the company’s earnings call. Not investment advice.