Walmart gets boost from higher earners but stock falls on weaker forecast

Walmart on Thursday reported strong quarterly results, continuing to benefit from an increase in higher earners who were purchasing more groceries and discretionary items during the condensed holiday shopping period. 

Shares slipped after the company forecast a lower-than-expected profit for the full year. 

The company reported U.S. revenue rising 4.1% to $180.6 billion for the fourth quarter, meeting Wall Street expectations. The company’s adjusted operating income rose 9.4% on a constant currency basis during the three-month period and 9.6% for the full fiscal year. However, profit growth is expected to be lower this fiscal year. Walmart expects net sales to grow 3% to 4% for fiscal year 2026 and for adjusted operating income to increase between 3.5% to 5.5% on a constant currency basis.

CFO John David Rainey told FOX Business that its guidance doesn’t indicate that it is seeing any weakness in consumer spending. Rainey said it has remained very consistent. 

“They’re making some of the same choiceful purchasing decisions that they have,” he said. “We still see them spending more money on food than general merchandise, but there’s not been any not been any incremental fraying of the consumer or anything like that.”

During the fourth quarter, Walmart saw U.S. e-commerce sales rise 20%. Sales at U.S. stores rose 4.6% driven by strong growth in general merchandise. The increase in discretionary spending marks a reversal of the trend seen in recent years, when inflation squeezed household budgets and forced many shoppers to focus only on essential items. 

The Arkansas-based retail giant said Thursday that it continued to gain market share, especially from higher-income households, as it added more than 150 key brands to its assortment over the past fiscal year and remodeled 650 stores. It remodeled 100 locations within the past three months alone. 

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Rainey previously told FOX Business that the nation’s largest retailer has been “upleveling” its brand and enhancing the looks of stores, which are key factors behind its appeal to higher-income shoppers. 

“Today’s Walmart is very different than the Walmart of several years ago,” Rainey said in a December interview with Fox Business, adding that it has been making changes that “appeal to a much broader demographic than what we have historically.” 

The company has also been doubling down on its grocery business as more consumers are turning to the company for their food needs amid lingering inflation. 

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In its third fiscal quarter, the company reported that its third-quarter revenue climbed more than 5% from the prior quarter to $169.6 billion, beating Wall Street’s estimate of $167.72 billion. Adjusted earnings per share also beat Wall Street estimates by 5 cents.

In the three-month period that ended Oct. 31, sales at U.S. stores jumped 5.3% due to “strength across merchandise categories and physical and digital channels,” Walmart reported. The company also announced it had continued to “gain market share in the U.S., both in grocery and general merchandise,” with households earning more than $100,000 accounting for 75% of its share gains. 

Walmart is a key indicator of U.S. consumer health given the significant share of consumer spending the company captures. As the nation’s largest employer, “any measurable negative revision to guidance is a warning about the economy,” Brian Mulberry, client portfolio manager at Zacks Investment Management, told FOX Business.