Walmart Q3 FY26 Earnings: Strong Results, Raised Outlook, and Market Ripples
Highlights of Walmart’s Q3 FY26 results
- Revenue beat – Walmart’s revenue in the quarter ended Oct. 31, 2025, was $179.5 billion, up 5.8% or 6% in constant currency. The company’s U.S. same‑store sales rose 4.5% while global e‑commerce sales jumped 27%.
- Advertising and membership growth – Walmart’s global advertising business (including VIZIO) grew 53% and the U.S. Walmart Connect division rose 33%. Membership and other income rose 9.0%, aided by 16.7% growth in membership income.
- Margins and earnings – The gross margin rate improved by 2 basis points. Operating income fell 0.2% due to a non‑cash compensation charge at PhonePe, but adjusted operating income increased 8.0%. Adjusted EPS was $0.62, beating the consensus estimate of $0.61.
- Balance sheet – Cash and cash equivalents were $10.6 billion, and free cash flow climbed to $8.8 billion. The company repurchased 75.3 million shares year‑to‑date for $7.0 billion.
Sentiment and forward guidance
CEO Doug McMillon said the team delivered “another strong quarter,” noting that e‑commerce was a bright spot and that Walmart gained market share while improving delivery speed and inventory management. He expressed confidence that the company is “well‑positioned for a strong finish to the year and beyond”. McMillon will retire in January, handing the reins to U.S. division head John Furner.
CFO John David Rainey offered more details on the earnings call. He said inflation is running in the low‑1% range and the team has done “a nice job” managing inventory levels and product mix.
Executives noted that tariff impacts have been less severe than expected and that pricing pressure is mainly confined to beef. Rainey highlighted that upper‑ and middle‑income households are driving U.S. growth and that higher‑income families are shopping more frequently at Walmart.
The company raised its fiscal 2026 guidance:
- Net sales growth – 4.8% to 5.1% (constant currency), up from the prior 3.75%–4.75% range.
- Adjusted operating income growth – 4.8% to 5.5%, higher than the previous range.
- Adjusted EPS – $2.58 to $2.63, compared with $2.52–$2.62 previously.
McMillon and Rainey both emphasized that Walmart’s everyday‑low‑price value proposition continues to resonate and that the company is gaining market share from shoppers trading down from mid‑tier retailers. More than 7,400 price discounts are active, and over 2,000 temporary cuts have become permanent, signalling aggressive price investment.
Pre‑market reaction and what it means
Investors applauded the revenue beat and the raised outlook. The combination of strong e‑commerce growth and improving margins suggests that Walmart is executing well despite a cautious consumer environment. The company has surpassed consensus EPS estimates in three of the last four quarters, and its revenue has beaten expectations four times in a row.
Implications for the broader market and stocks to watch
Walmart’s blowout quarter shines a light on the health of the American consumer. Quartz argues that while the numbers look strong—revenue up nearly 6% and online sales up 27%—they mask a massive “trade‑down” as middle‑ and upper‑middle‑income households shift from retailers like Target to lower‑priced options. Grocery‑led comps and an emphasis on essentials suggest that shoppers are prioritizing value. This trade‑down benefits Walmart but signals stress elsewhere in retail.
Zacks’ pre‑earnings note to investors highlighted that Home Depot, Lowe’s, Target, and Walmart were the big names to watch during this retail‑heavy earnings week. Home Depot’s and Target’s results showed softer demand and cautious consumers, reinforcing concerns about discretionary spending. Analysts observed that the market had been pulling back and that strong reports from Walmart and Nvidia could be “exactly what the market needs to stabilize and kick‑start the next leg higher”.
In the supermarket industry, Zacks noted that Kroger is expected to post quarterly EPS of $1.04 and revenues of about $34.31 billion. Its results, alongside those of Costco and Target, will offer further evidence on consumer behavior. Meanwhile, retailers that compete directly with Walmart on price, such as Dollar General (DG) and Dollar Tree (DLTR), may gain or lose share depending on how effectively they match Walmart’s discounting and e‑commerce capabilities. Investors should also watch consumer‑facing stocks like Amazon (AMZN), Costco (COST), and Costco‑like membership models to gauge whether shoppers continue shifting to value.
Overall, Walmart’s upbeat guidance and strong Q3 performance provide a bullish signal for the retail segment, but the underlying story of consumers trading down hints at caution for more discretionary retailers. The fact that Walmart’s stock moved higher in pre‑market trading despite macro uncertainty suggests that investors see it as a defensive name in a choppy market.