Walmart (WMT) is expected to post robust second quarter results on Thursday, even though Wall Street expects same-store sales in the US to slow.
Wall Street forecast 3.7% same-store sales growth, per Bloomberg consensus data. That would mark the slowest second quarter since 2020.
E-commerce, faster fulfillment, increases in membership revenue, and ongoing market share gains across income cohorts, especially wealthier households, are expected to drive results, Telsey Advisory Group analyst Joe Feldman wrote in a note to clients.
However, Feldman added, those gains could be offset by "general pressure on consumer spending from increased gas prices from the Iran war and broader inflation."
Wall Street believes that customers shopped at Walmart more frequently during the quarter but spent less when they did. E-commerce sales are expected to have jumped 22% overall, with a 4.5% increase in the US, which could be tied to promotions Walmart dished out to compete with Amazon's (AMZN) Prime Day event.
"Advertising, merchant services, membership, and last-mile delivery should lead to growing operating income faster than sales," Feldman wrote.
Bank of America analyst Christopher Nardone wrote in a note to clients that he believes Walmart can still deliver an earnings beat and guidance raise if same-store sales growth slows "as long as the rest of the business remains strong."
In the first quarter, the retail giant said it expected net sales to increase 4% to 5% in the second quarter and adjusted earnings to be in the range of $0.72 to $0.74 in constant currency. Analysts are expecting second quarter earnings per share of $0.75 on average.
Wall Street is also eager to hear about updated guidance for the rest of the year, especially how the back-to-school season is going and the retailer's holiday plans.
In the first quarter, the company reiterated a more conservative full-year fiscal outlook. Typically, the company waits until the second quarter to update its guidance, Deutsche Bank analyst Krisztina Katai said.
CFO John David Rainey called out "hundreds of millions of dollars of pressure from higher fuel prices" as a key reason for the cautious guidance.
For fiscal year 2027, Walmart forecast revenue to increase by 3.5%-4.5% and adjusted earnings of $2.75-$2.85. That guidance was conservative compared with the nearly 5% growth Wall Street predicted and original estimates of adjusted earnings of $2.97 per share for the year.
IEEPA tariff refunds were not included in the guidance, but the company said it could be eligible for a return worth roughly 0.5% of its US annual sales. Based on the 2025 revenue of $483 billion, that would mean a roughly $2.4 billion tailwind for the business.
Rainey said Walmart plans to "prioritize price investment" if it gets a refund to help counteract the effect of inflation on consumers' budgets, which could explain Walmart's price cuts on thousands of items, including beef, chips, and soda, in early July.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at [email protected].
Click here for all of the latest retail stock news and events to better inform your investing strategy