Walmart (NYSE: WMT) will report its Q1 fiscal year 2026 earnings on Thursday, May 15 before the opening bell.
Walmart is expected to bring in solid results as the company’s management looks optimistic on the company’s ability to dodge the tariff storm.
With strategic in-store and digital growth, innovative ventures like its third-party Walmart Marketplace, advertising initiatives, and a robust omnichannel strategy, the company remains triumphant in the retail sector. However, economic uncertainties, rising costs, and potential tariff impacts present short-term challenges.
Earnings Outlook and Estimates
Wall Street is expecting Walmart to report its Q1 FY26 with its EPS forecast at $0.58, indicating a 5% decline from the previous year’s quarterly figure. Revenue is expected to come in at $165.6 billion, up 2.56% YoY. ⁽¹⁾
Walmart has an excellent record when it comes to beating analyst expectations, with the company exceeding revenue estimates in every quarter in the last two fiscal years. The company also has a 100% track record of beating analyst estimates on EPS in the last two fiscal years. ⁽²⁾
The company has shown resilience and gained market share over past quarters, driven by its effective value pricing strategy, large scale, efficient supply chain management, and its focus on revenue diversification. These factors position Walmart well to navigate economic uncertainties.
A 60% focus on groceries reduces reliance on imported goods and limits exposure to supply chain disruptions. Continued market share gains in digital and omnichannel strategies, strengthened by the recent Vizio acquisition, could support gross margin expansion. Deep supplier relationships, advanced pricing mechanisms, and automation can also position Walmart to reduce tariff risks. ⁽³⁾
Key Factors to Watch
US Core Retail Operations
Walmart’s US operations are the largest segment, which plays a huge role in revenue. Comparable sales growth is expected to rise between 3-4%. FY26 adjusted operating income is expected to grow between 3.5% and 5.5%, despite a 1.5% headwind due to the VIZIO acquisition and leap year factors. That said, the range of potential outcomes has broadened backed by a less favorable category mix, increased casualty claims expenses and Walmart’s commitment to maintaining pricing flexibility as new tariffs come into effect. Notably, casualty claims represent the largest cost pressure, contributing around $200 million in expense headwinds to operating income growth. ⁽⁴⁾
E-Commerce Segment
With the growth of third-party marketplaces and store pickup and delivery, e-commerce sales are expected to increase by 15% to 20%. Customers’ willingness to pay for faster delivery and longer delivery routes has led to improvements in e-commerce. ⁽⁵⁾
Advertising and Membership Programs
Membership income is another key driver for Walmart’s revenue. In the US, Sam’s Club continues to grow its member base, with an increasing share of high-value memberships. Similarly, Walmart+ membership momentum remains strong. Internationally, Sam’s Club China is contributing to growth with new club openings, further boosting membership income and revenue streams.
Future Guidance
Comments from management on Walmart’s sales trends, tariff impacts, changes in segment forecasts and economic conditions for fiscal year 2026 will be heavily monitored. Traders and investors will be watching the revenues of each segment with management’s comments on the current economic climate and future guidance.
Tariff Risks and Other Challenges
Despite its strengths, Walmart also faces headwinds in the first quarter of fiscal 2026. In April, the company noted increased week-to-week sales volatility, driven by economic uncertainty and weakened consumer sentiment.
Rising casualty claims expenses, contributing approximately $200 million in headwinds, are the largest drag on operating income. A less favorable category mix and Walmart’s commitment to pricing flexibility amid new tariffs further widen the range of potential outcomes. ⁽⁶⁾
While Walmart is better positioned than peers to manage tariffs due to its deep supplier relationships, automation, and inventory management, Bank of America stated that “China tariffs at current levels would be a significant cost headwind and potential source of supply disruption.” ⁽⁷⁾
Stock Performance and Analysts’ Ratings
Over the past three months, Walmart stock has dropped 8% compared with the industry’s decline of 6.8%. In comparison, the S&P 500 has declined by 8.1% during the same period. The company underperformed against some key peers, including Kroger, which gained 9.5%, and Ross Stores, which rose 1.3%. Target stock has dropped 25.1% in the last three months. ⁽⁸⁾
Analysts from Morgan Stanley and Oppenheimer kept their BUY ratings in recent notes previewing Walmart’s report. Oppenheimer analysts lifted their price target to $110 from $100 and Morgan Stanley held firm at $115. ⁽⁹⁾
Morgan Stanley analysts said on Tuesday that amid tariff uncertainty, Walmart is “among the best positioned in our coverage universe to navigate through these challenges, given its scale, supply chain advantages, category mix and price gaps.” They expect Walmart to widen its full-year outlook ranges.
Bottom Line
Walmart’s Q1 FY26 results might bring on some short-term volatility that could impact the company’s long-term outlook. Its dominant US operations, improved e-commerce segment, high-margin digital ventures expansions and growing membership income could support Walmart in delivering shareholder value.
Even though Walmart may have had a mixed finish to the year, overall, it was a strong one for the retail giant.
The new fiscal year, on the other hand, looks like a completely different proposition, one that is riddled with uncertainty and one where the U.S. consumer confidence is lacking.
Walmart is considered to play a major role in the economy and as such, the management’s commentary on its Q1 performance should be the main focus area for traders and investors.
