Walmart’s Q1 2026 Earnings: Growth Amid Challenges

Walmart Inc. ((WMT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Walmart’s Q1 2026 Earnings Call: Strong Growth Amid Challenges

Walmart’s recent earnings call for the first quarter of 2026 painted a picture of robust growth tempered by some challenges. The sentiment was largely positive, with the company reporting significant gains in sales, eCommerce profitability, and advertising and membership income. However, the impact of tariffs and softness in certain markets posed challenges. Despite these hurdles, Walmart’s operational efficiency and strategic initiatives were highlighted as key factors positioning the company for future success.

Strong Q1 Performance and Growth

Walmart reported a solid start to the fiscal year with a 4% increase in sales and a 3% rise in profit in constant currency. International sales surged by 7.8%, with eCommerce experiencing a remarkable 22% growth globally. The Walmart U.S. and Sam’s Club U.S. segments showed impressive comparable sales growth of 4.5% and 6.7%, respectively, underscoring the company’s strong market position.

eCommerce Profitability Milestone

In a significant achievement, Walmart’s eCommerce business reached profitability on both a U.S. and global enterprise basis for the first time. This milestone was driven by network densification, reduced delivery costs, and an increased customer willingness to pay for expedited delivery, marking a positive shift in the company’s business model.

Advertising and Membership Growth

Walmart’s advertising business demonstrated robust growth, increasing by 50%, with Walmart Connect in the U.S. growing 31%. Membership fee income also saw a nearly 15% increase across the enterprise, supported by strong growth in member counts and renewal rates, highlighting the company’s successful engagement strategies.

Operational Efficiency and Inventory Management

The company reported an increase in consolidated gross margin, attributed to disciplined inventory management and business mix improvements. Inventory levels were well-managed, rising only 3.8%, which helped mitigate the impacts of tariffs and contributed to overall operational efficiency.

Strong Health and Wellness Segment

Walmart’s health and wellness segment experienced high-teens growth, with prescription volumes increasing by over 10%. The launch of a new pharmacy delivery service further contributed to digital user growth, showcasing the company’s commitment to expanding its health services.

Impact of Tariffs

Tariffs, particularly from China, were identified as an immediate challenge, creating cost pressures and the potential for higher prices. Walmart acknowledged that elevated tariffs could negatively impact short-term financial performance, but expressed confidence in navigating these challenges.

General Merchandise Sales Challenges

The company faced some headwinds in general merchandise sales, which declined slightly due to softness in electronics, home products, and sporting goods. Ongoing consumer pressure and deflation in these categories were noted as contributing factors.

International Market Softness in Mexico and Canada

Sales in Mexico were slightly softer due to the Easter shift and a weaker macro environment, while Canada also faced challenges, impacting overall international performance. These factors highlighted the variability in international market conditions.

Forward-Looking Guidance

Looking ahead, Walmart remains optimistic about its growth trajectory, despite challenges such as tariffs and cost pressures. The company emphasized its focus on enhancing delivery speed, aiming to reach 95% of the U.S. population with delivery options of three hours or less. This strategic focus, coupled with strong performance metrics, underscores Walmart’s commitment to maintaining its long-term growth strategy.

In conclusion, Walmart’s Q1 2026 earnings call reflected a strong performance with notable growth in various segments, despite facing some challenges. The company’s strategic initiatives and operational efficiency were key highlights, positioning it well for future growth. As Walmart continues to navigate external pressures, its focus on innovation and customer engagement remains a central theme in its growth narrative.