Walmart Q1 Revenue Beats at $177.8B, E-Commerce & Advertising Hit Record Highs, but Fuel Costs Cut Profit Growth in Half

Bitget2026/05/21 14:01

By:Bitget

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Key Takeaway: Walmart delivered above-consensus revenue in FY2027 Q1, with strong growth in high-margin businesses such as e-commerce and advertising, alongside solid U.S. comparable sales. However, fuel costs significantly weighed on profit growth, resulting in adjusted EPS that merely met — rather than beat — expectations. Q2 revenue guidance was encouraging, but EPS guidance came in below market expectations, sending shares down nearly 3% in pre-market trading. Full-year guidance was maintained, reflecting management's confidence in the annual growth trajectory, while emphasizing its decision to absorb fuel cost increases internally to preserve consumer value.

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Detailed Breakdown:

1. Overall Revenue & Earnings

Total Quarterly Revenue: $177.8B, +7.3% YoY, above consensus estimate of $175.06B.
Adjusted EPS: $0.66, in line with market expectations.
Operating Income: $7.493B, +5.0% YoY, notably lagging revenue growth, primarily dragged by fuel costs.
Fuel Cost Impact: Created a 250 bps headwind on operating margin; the company absorbed virtually all fuel price increases without passing them on to consumers.

2. U.S. Domestic Business

Walmart U.S. Net Sales: $117.2B, +4.5% YoY.
U.S. Comparable Sales (ex-fuel): +4.1%, slightly above expectations; transaction volume +3.0%, average ticket +1.1%.
Key Drivers: Improved traffic quality, market share gains, and non-price-driven growth.

3. Other Business Segments

Global E-Commerce: Sales +26% YoY, spanning Walmart U.S., International, and Sam's Club, contributing approximately 530 bps to comparable sales growth; store-fulfilled delivery and third-party marketplace were primary drivers.
Global Advertising: +37% overall (total advertising revenue +36%; Walmart Connect platform ex-VIZIO +44%), emerging as a high-margin growth engine.
Membership Fee Income: +17.4% globally; net new member additions reached a record high for the period, with Walmart+ accelerating its expansion.
International Segment: Net sales $35.1B, +18.0% YoY on a reported basis, +10.1% on a constant currency basis (FX contributed ~$2.3B tailwind); operating income +10.2% in constant currency to $1.425B; e-commerce +27%, advertising +32%.
Gross Margin: +29 bps, driven by higher mix of high-margin businesses; operating expense ratio +56 bps, reflecting increased depreciation and employee healthcare benefit costs.

4. Next Quarter Guidance (FY2027 Q2)

Net Sales Growth (constant currency): +4% to +5%.
Adjusted Operating Income Growth: +7% to +10%.
Adjusted EPS Guidance: $0.72–$0.74, below consensus estimate of $0.75.
Full-Year FY2027 Guidance Maintained: Net sales +3.5% to +4.5%; adjusted operating income +6% to +8%; adjusted EPS $2.75–$2.85.

5. Market Context & Investor Concerns

Core Tension: Strong revenue and e-commerce/advertising growth, but self-absorbed fuel costs slowed profit growth, and Q2 EPS guidance missed expectations — triggering short-term market disappointment.
Key Risks: Persistently elevated fuel prices (potential for equal or greater pressure in Q2), rising fulfillment and delivery costs, international FX volatility, and broader macroeconomic uncertainty.
Investor Reaction: Shares fell ~3% pre-market; focus remains on cost control capability, sustained contribution from high-margin businesses, and the achievability of full-year guidance — though management highlighted healthy inventory levels and continued market share gains.

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Disclaimer: This article is for informational purposes only and does not constitute investment advice.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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