Walmart Earnings Tomorrow: Can WMT Prove the Consumer Is Still Holding Up?

TradingKey - Walmart (WMT) reports earnings for the second quarter of its fiscal year 2027 before the market opens at 6:00 AM on Tuesday, August 20, 2027. Deteriorating conditions in the economy influence the timing of this release. Consumers are especially anxious about the unclear direction of tariffs and energy policies, rapid inflation, and weakening consumer sentiment (the University of Michigan Index dropped from 55.2 to 51.0 between July). Additionally, Walmart’s positive earnings in the first quarter showed market share growth across all income demarcations and high-growth e-Commerce (up 26 percent), advertising (up 37 percent), and Walmart+ (first-quarter net adds of memberships).

Analysts expect an adjusted EPS of $0.74 and an overall second-quarter revenue of $186.9B, representing an increase of 6.3 percent year-over-year. The earnings call will attempt to resolve the market's concerns about how consumers' cautious spending will affect Walmart's ability to hold its market share of low priced goods with its pricing strategies, artificial intelligence-powered supply chains, and advertising and membership models. For other investors, the report will advise on consumer buying behavior based on income in the increasingly important segments of the economy.

The market is waiting to see what Walmart will say about consumers for the full year of 2027 in their earnings report. After Walmart's report, investors will wait and see what the Federal Reserve representatives will say in their respective presentations at the Jackson Hole conference on Wednesday and Thursday, August 21 and 22.

Q1 Set a Strong Foundation: E-Commerce +26%, Advertising +37%

Walmart’s revenue in Q1 reached $177.8 billion, growing 7.3% year over year and 5.9% on a constant currency basis. Adjusted EPS was $0.66. However, it was the quality-of-earnings indicators that were the most important. Sales in the U.S. on a comparable basis that excluded fuel, grew by 4.1% (3% transacted, 1.1% ticket), and e-commerce sales for the global segment jumped by 26%, and Walmart U.S. e-commerce contributed ~530 basis points to the comp-sales increase compared to last year’s ~350 basis points, and global advertising revenue grew 37% with Walmart U.S. advertising growing by 36% and Walmart Connect growing by 44% Drastically.

Crucially, these growth segments are more profitable. Advertising and marketplace services have substantially improved economics over grocery retail. This allows Walmart to increase earnings faster than merchandise sales, the main driver behind current valuations.

Walmart+ Membership Becoming Economically Material: 4x Spend, 7x Frequency

Global membership fee revenue in Q1 grew by 17.4% and for the first time, Walmart+ recorded the highest ever net additions in the first quarter. Walmart+ members account for 4x total spending and visit the e-commerce section of the website 7x more than members. Management adds elements of Costco, Amazon, and other traditional retail to retain grocery margin profits, even if they are low.

The Consumer Has Deteriorated Since Q1 — But Walmart May Benefit

August saw a sharp decline in consumer sentiment, down from 55.2 to 51.0, and the decline was largely driven by older consumers, lower-income consumers, and consumers without college degrees, all of whom are relevant Walmart customer segments. Expectations for inflation increased from 4.2 to 4.3 percent. The pressure for energy costs has worsened, due in large part to the continued tension in the Middle East. This is the setting Walmart faces on Thursdays.

Contrary to this setting, it may improve Walmart's overall competitive position.

When the economy is in a tough spot and customers are worried about their wallets, Walmart holds an advantage over traditional grocers because of its market share and its ability to position itself as the low-price leader of discretionary goods. Ultimately, it’s about whether those trade gains offset pressure on overall value. Walmart gained share in all income segments in Q1, a trend that included high-income customers who were trading down to Walmart, which is indicative of a very unique and strong segment of lower-income consumers in the market.

AI and Automation: Logistics Efficiency Creates Hidden Earnings Leverage

Through automation and AI, Walmart is choosing to redesign its supply chain. Traditionally, supply chains used a lot of intervention because they weren’t flexible. Walmart is using AI to predict demand in real-time, and to direct inventory and cut waste, all while simplifying their workflows. Walmart is aggressively expanding the use of automation in its AI-directed, highly automated distribution center. They have a goal of 16 of these next-generation distribution centers by the end of 2026. 

Given that they have $700 billion in sales, even a slight improvement in the efficacy of their logistics means a lot dollars. AI doesn’t have to create new products for Walmart to improve its shareholder return — it merely needs to improve its inventory, labor, and fulfillment costs.

Technical Setup: $116.40 Resistance, Triangle Consolidation, $114.67 Support

On the 2-hour chart, WMT currently sits around $115.26, bouncing back after hitting lows in early August. Price has now retaken both the major moving averages and is trading in a triangle consolidation formation beneath both the $116.40 resistance and a falling trendline.

Walmart Price Chart - Source: Tradingview

The move above $114.67 was important, providing support on a move back down. RSI at 62 indicates some loss of momentum, but is still bullish. A break above $116.40 would be bullish for the price of $117.71, $118.99, and $120.17. Should $116.40 hold, the first support area would be $114.67.

Six Metrics to Watch Thursday Morning

• Revenue: Consensus of $186.9 Billion, Management Guidance $181-$186 Billion; Constant Currency Growth of 4-5%
• Walmart U.S. Comp Sales: With a +4.1% Ex-Fuel print, strong growth confirms continued market share.
• E-Commerce Growth: +26% Globally; Is Growth Above 20% Sustainable?
• Advertising Growth: +37% Continuation of +35% Likely to strengthen the Higher-Margin Thesis
• Customer Commentary: The week’s most compelling consumer breakdown is by income cohort (lower/middle/upper)
• FY2027 Guidance: Current guidance of $2.75-2.85 Adjusted EPS; Growth would be Market Friendly Despite a Modest Q2 Beat

The Real Test: Can Walmart Take Share in Weakening Consumer?

While consensus is set at $0.74 (top of Walmart’s guidance range) for adjusted EPS, that is not the true test. The real test is Walmart’s ability to gain share as consumer sentiment deteriorates. A strong e-commerce and advertising growth of +4.1% in Q1 was encouraging. 

Walmart would prove it is able to grow earnings with operational leverage and higher margin streams to stay strong in a recession. A deceleration in comp sales and a cautious outlook by management on consumer discretionary would be a serious concern across all of retail. No other company is a better leading indicator of the health of the U.S. consumer than Walmart.

Bottom Line

Walmart reports on the 20th at 6am. Strong fundamentals for Q1 at $177.8B with 26% growth in e-commerce, 37% growth in advertising, and a 4.1% growth in comp sales. They also reported an advancement in customer growth for Walmart+. There was a sharp drop in consumer sentiment in August (51.0 from 55.2) with a rise in inflation expectations. There are still margin risks with existing tariffs. However, Walmart's approach to value pricing, AI for logistics, advertising, and marketplace business and membership models may allow Walmart to dominate the weakening consumer landscape.

WMT is currently trading at $115.26 in a triangle consolidation with $116.40 the important resistance and $114.67 the important support level in an overall bullish structure. Jacksons Hole conference (Aug 21-22) will provide context the following day. 

Thursday will provide the clearest of the week's consumer reads. With a strong EPS of $0.74+, solid comp sales, and an improved positive outlook, this will support a resilience thesis. If weakness in sentiment is present and evident in either traffic or ticket, this will advise caution for discretionary retail. This is not an investment advice, this is analysis.