Walmart (NASDAQ:WMT) executives said the retailer delivered stronger-than-expected first-quarter fiscal 2027 sales growth, driven by higher transactions, e-commerce momentum, marketplace gains and growth in advertising and membership revenue, while higher fuel costs weighed on operating income.
CEO John Furner said Walmart’s business is “performing how we expect it to,” adding that U.S. consumers are showing signs of pressure and are looking to the retailer for value. He said Walmart has continued investing in prices and now has about 7,200 rollbacks in place, including a recently launched basket of grilling essentials designed to feed eight people for under $5 per person.
“Transaction growth in the U.S. was the strongest we’ve seen in six quarters,” Furner said. He added that Walmart is gaining market share and that transactions and unit growth are driving the top line.
Sales Beat Guidance, Fuel Costs Pressure Profit
Chief Financial Officer John David Rainey said constant-currency sales rose nearly 6% in the quarter, exceeding the top end of Walmart’s guidance range by 120 basis points. Consolidated revenue in constant currency increased nearly $10 billion, led by Walmart U.S. comparable sales growth of 4.1%.
Rainey said adjusted operating income in constant currency rose approximately 5%, in line with guidance, despite higher-than-expected fuel costs. He said Walmart absorbed about $175 million in higher-than-planned fuel costs in global distribution and fulfillment operations, equal to about 250 basis points of operating income growth.
Rainey said Walmart is reiterating its full-year guidance even after the recent increase in fuel costs. The company continues to expect constant-currency sales growth of 3.5% to 4.5% and operating income growth of 6% to 8%. For the second quarter, Walmart expects constant-currency sales growth of 4% to 5%, operating income growth of 7% to 10% and earnings per share of $0.72 to $0.74. Full-year EPS is expected to be in the range of $2.75 to $2.85.
Rainey said if current exchange rates remain in place, they would provide an approximate 90-basis-point benefit to reported sales growth and a 130-basis-point benefit to operating income growth in the second quarter.
E-Commerce, Marketplace and Faster Delivery Drive Growth
Walmart executives highlighted continued e-commerce gains across the business. Furner said enterprise e-commerce sales rose 26%, while Walmart U.S. delivery grew 45%. He said more than 36% of U.S. store-fulfilled deliveries during the quarter were completed in less than three hours.
Rainey said Walmart can now reach about 60% of the U.S. population in 30 minutes or less, and customer satisfaction with its delivery offering reached record highs. In Sam’s Club U.S., club-fulfilled delivery sales grew more than 90% in the quarter.
International delivery speed was also a focus. Furner said Flipkart in India now operates more than 800 micro-fulfillment centers for Flipkart Minutes, delivering items in less than 13 minutes on average. In China, Walmart delivered more than a half-billion units in the quarter, with about 75% arriving in under one hour.
Walmart’s marketplace continued to expand. Furner said U.S. marketplace sales grew almost 50% in the quarter, and Walmart recently launched marketplace cross-border into Canada and Mexico. Rainey said U.S. third-party marketplace sales growth reached its highest level in two and a half years. Units shipped same day or next day through Walmart Fulfillment Services grew nearly 150%.
Higher-Margin Businesses Become Larger Profit Contributors
Executives said Walmart is continuing to shift its profit mix toward higher-margin businesses, including advertising, membership, marketplace and fulfillment services. Furner said advertising grew more than 30% in each segment, including 36% for Walmart U.S., and membership fee revenue rose 17% across the enterprise.
Rainey said Walmart’s advertising business grew 37% globally and that Walmart U.S. advertising grew 36%. He said marketplace sellers increased their advertising spending by more than 50%, with a corresponding lift in sales. Membership fee revenue increased more than 17%, including strength at Sam’s Club and in select international markets. Walmart+ membership fee revenue growth accelerated, with net additions reaching a new first-quarter high.
Rainey said membership and advertising together account for roughly one-third of Walmart’s earnings, a mix he said makes the business different from Walmart a decade ago and helps provide more recurring revenue.
General Merchandise Improves, Consumer Pressure Remains
Walmart executives said general merchandise performed well, helping margins. Rainey said the first quarter marked the first time in 18 quarters that merchandise mix contributed favorably to Walmart U.S. gross margin expansion, which was 29 basis points. General merchandise grew mid-single digits in the quarter, and Walmart posted its highest level of general merchandise share gains in five years.
Fashion was a standout, according to both Furner and Rainey. Rainey said fashion’s gains also helped categories such as home decor and beauty. He noted that 75% of beauty growth came from new brands, including La Roche-Posay and others. Still, Rainey cautioned that higher tax refunds likely provided some benefit to general merchandise in the quarter.
On the consumer, Rainey said higher-income shoppers are spending with confidence across many categories, while lower-income consumers are more budget conscious and may be experiencing financial stress. He pointed to Walmart’s fuel business, saying the number of gallons customers filled up with fell below 10 for the first time since 2022.
Rainey said like-for-like inflation was a little more than 1% in the quarter. He said egg deflation reduced the reported inflation figure by almost 100 basis points, but higher fuel prices could create upward pressure on average unit retail prices if they persist.
AI and Automation Remain Strategic Priorities
Furner said Walmart is “becoming AI native,” using artificial intelligence to improve shopping, personalization, inventory positioning and fulfillment decisions. He highlighted Sparky, Walmart’s AI shopping agent, saying weekly active users rose more than 100% in the quarter and that Sparky’s intelligence and response quality improved by 40% this year.
David Guggina, president and CEO of Walmart U.S., said Sparky is now live across the app, web and in-store experiences, with capabilities including personalized replenishment, meal planning and more intelligent recommendations based on inventory, prices and delivery speed. He said units purchased through Sparky have grown more than fourfold since the previous quarter.
Furner also pointed to automation in the supply chain, saying about half of Walmart U.S. e-commerce fulfillment center volume is automated, more than 60% of stores receive some freight from automated distribution centers and more than half of regional distribution centers are in various stages of being retrofitted.
“Our business is strong,” Furner said in closing. “We have momentum and a clear strategy.”
About Walmart (NASDAQ:WMT)
Walmart is a multinational retail corporation that operates a broad portfolio of store formats and digital services. Its core business includes large-format supercenters, discount department stores, neighborhood grocery stores and a membership warehouse chain, Sam’s Club. The company’s merchandising mix covers groceries, household goods, apparel, electronics and pharmacy services, supplemented by private-label products and category-specific offerings. Walmart pairs its physical store network with online platforms and mobile applications to provide omnichannel shopping, fulfillment and delivery options for consumers and businesses.
The company was founded by Sam Walton, who opened the first store in Rogers, Arkansas in 1962; it is headquartered in Bentonville, Arkansas.
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