Shares of Walmart plunged 9.2% on Thursday, reaching their lowest level in 2026, following the retail giant’s second-quarter earnings report that revealed troubling signs about American consumer health. The decline has pushed the stock more than 20% below its recent high.
While the retailer exceeded profit projections with adjusted earnings of $0.81 per share versus the anticipated $0.74, and revenues of $187.9 billion surpassed estimates of $186.75 billion, the market response was decidedly negative. The company even upgraded its annual outlook, yet investors weren’t convinced.
The critical metric that disappointed was comparable store sales. When fuel is excluded, these sales climbed merely 2.6%, substantially below Wall Street’s 3.7% projection. This represents the weakest comparable sales expansion Walmart has delivered since the pandemic era.
Removing the negative impact from its health and wellness division still left comparable sales at 3.4%, falling short of analyst expectations.
The average amount customers spent per transaction increased by only 1.1% during the period. This marks a considerable deceleration from the 3.1% growth seen in the same quarter last year. Foot traffic remains steady, but shoppers are pulling back on their per-visit expenditures.
A portion of the underperformance stemmed from Walmart’s pharmacy and health operations. Government-mandated prescription drug pricing negotiations created a 0.8% drag on comparable sales performance, according to company disclosures.
The retailer announced plans to deploy $2.9 billion in tariff rebates toward maintaining competitive pricing. Additionally, Walmart projected an extra $2 billion in fuel-related expenses for the fiscal year.
During the first quarter, Walmart had already absorbed a $175 million profitability hit from elevated energy expenses. The latest quarterly report intensified these worries.
Paul Hickey, an analyst with Bespoke Investment Group, observed that the current report amplified negative sentiment that started emerging following the first-quarter results.
Kate McShane, an analyst at Goldman Sachs, decreased her WMT price objective to $130 from the previous $141 while maintaining a Buy recommendation. McShane highlighted the improved second-half projections, double-digit profit margins in eCommerce operations, and opportunities for capturing additional market share as justification for continued optimism.
Goldman’s earnings per share forecast for 2026 declined approximately 2%, roughly matching the stock’s percentage drop.
BofA Securities similarly reduced its price target, adjusting from $144 down to $126, while preserving its Buy rating. BofA highlighted the slowing momentum in US comparable sales and observed that Walmart’s elevated valuation multiple intensified the market’s negative response.
The company has increased its dividend payout for 31 straight years.
Dan Sheehan, portfolio management director at Telos Family Office, noted that company leadership characterized consumers as “resilient” while conceding that elevated food and energy prices are constraining family budgets.
July retail sales across the US fell 0.6%, significantly worse than the forecasted 0.1% gain. Analysts at Goldman Sachs have projected that inflation-adjusted consumer spending growth may decelerate to approximately 1% during the second half of 2026.
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