Walmart beat and raised full-year guidance, yet shares fell as US comps grew just 2.6% ex-fuel, the slowest since 2020, and a 750 bps tariff-refund benefit drove most of the operating-income growth

Walmart Inc. (WMT) reported fiscal 2027 second-quarter results on August 20 for the 13 weeks ended July 31, 2026, and the tape and the income statement told opposite stories. Per the earnings release and Walmart's newsroom, the company beat on the top and bottom line and raised its full-year outlook, yet shares fell roughly 7% to 9% in early trading because Walmart U.S. comparable sales grew just 2.6% ex-fuel, the slowest since 2020. Revenue was $187.9 billion (up 5.9%, or 5.1% in constant currency) and adjusted EPS was $0.81 (GAAP $0.80), both ahead of FactSet consensus of $186.6 billion and $0.74 per Forbes and Fortune. This is a beat-and-raise sitting on top of a soft demand print, not a guidance cut and not a broken consumer.

The instrument: a beat-and-raise the stock sold anyway

Start with what the print is. Revenue of $187.9 billion topped the $186.6 billion Street number, adjusted EPS of $0.81 cleared the $0.74 consensus, net income was $6.4 billion, and Walmart lifted full-year guidance rather than trimming it. FY27 net sales are now guided to grow 4.0% to 5.0% in constant currency, adjusted operating income 7.0% to 8.5%, and adjusted EPS to $2.80 to $2.87. That is a beat-and-raise, not a restatement and not a warning.

The tape disagreed. Shares dropped roughly 7% to 9% intraday, one of the stock's largest single-day losses in months, because the market priced the demand line rather than the earnings line. The gap between GAAP $0.80 and adjusted $0.81 is itself worth naming: adjusted EPS strips out a $0.12 net loss on equity and other investments and an $0.11 net benefit from a tax matter, so the two offsets nearly cancel and neither number is the story. The comp is.

The number under the headline: 2.6%, and the two things bending it

Walmart U.S. comparable sales rose 2.6% ex-fuel, down from 4.6% a year earlier and short of the roughly 3.8% FactSet had modeled. Fortune, citing FactSet, called it the smallest comp gain since the 1.9% increase in the quarter ended January 2020, which is why "slowest since 2020" is the honest frame. The composition matters more than the headline: transactions grew 1.5% while average ticket rose only 1.1%, against a 3.1% ticket gain last year. More trips, smaller baskets, almost no pricing.

One policy line is dragging the comp directly. The release attributes a 125 bps headwind from pharmacy deflation tied to the new Maximum Fair Price drug regulation that took effect January 1; after share gains elsewhere in health and wellness, that nets to an 80 bps drag on the total comp, and excluding health and wellness, comps were about 3.4%. So the 2.6% is real but partly a drug-pricing artifact, not evidence that the shopper walked out.

The offset the beat leans on: a 750 bps tariff-refund benefit

The margin side has its own asterisk, in the other direction. Adjusted operating income grew about 17% in constant currency, but Walmart is explicit that the number "included a 750bps net benefit from tariff refunds received," and that underlying growth without it was at the top of its normal range. The cash behind that is nearly $2.9 billion in IEEPA tariff refunds, which Walmart says it is pushing straight back into price: more than 11,000 rollbacks in the quarter and, in the company's words, "investing in prices because customers are looking for" them. Gross margin rose 96 bps, led by Walmart U.S. and, per the release, "primarily impacted by tariff refund impacts."

Put the two asterisks together and the quarter reads cleanly: pharmacy deflation is dragging the comp down while tariff refunds are propping the margin up. Strip both and Walmart is a low-single-digit-comp retailer with real growth engines underneath, U.S. eCommerce up 24% and advertising up 38%, funding price cuts with a one-off refund windfall.

The takeaway

Book this as a beat-and-raise on soft demand, not as "the US consumer broke" and not as "Walmart crushed it." The 2.6% comp is the slowest since 2020 and it is genuine, but the EPS beat leans on a 750 bps tariff-refund benefit and the margin help of passing that cash into price. The tell for next quarter is in the guidance mechanics: CFO John David Rainey told investors to judge Q2 and Q3 together, and Q3 sales are guided to just 3.0% to 3.75%, with a Flipkart Big Billion Days sale-timing shift moving revenue between the two quarters, so the deceleration is not obviously behind the company. If you own WMT or read it as a consumer bellwether, watch whether comps re-accelerate once the tariff-refund tailwind and the Maximum Fair Price drag both roll off, because that, not the headline EPS, is what the beat is currently borrowing against.