Walmart Inc. Q3 FY2026 earnings call

Management Statement and Operational Highlights

• Leadership Transition: Doug McMillon handed over the reins to John Furner, who is excited about leading Walmart into the future with a focus on helping people save money and live better.
• Segment Performances: Strong sales and profit growth across segments; e-commerce up 27% overall, with each segment seeing e-commerce growth above 20%; advertising grew 53% globally, membership income up 17%.
• E-commerce and AI: E-commerce growth was a highlight, with plans to make e-commerce more personalized, multimodal, and contextual using AI; partnership with OpenAI allows direct purchases from Walmart and Sam's Club through ChatGPT.
• Inventory and Pricing: Good inventory management, with Walmart U.S. inventory up 2.6% despite higher costs; continued focus on everyday low prices with rollbacks leading to permanent price reductions.
• Supply Chain Automation: Investments in supply chain automation are paying off, with over 50% of e-commerce fulfillment center volume automated, improving unit productivity and lowering costs.

Segment Performance

• International: Constant currency sales increased 11.4%, adjusted operating income grew 16.9%, e-commerce sales up 26%. Approximately 1/3 of international business is digital, with e-commerce in China at 50% penetration and nearly 80% of digital orders in China arriving in under an hour.
• Walmart U.S.: Comp sales grew 4.5%, e-commerce grew 28% with marketplace sales growth 17%, like-for-like inflation was 1.3% with food and general merchandise up low single digits. Had about 7,400 active rollbacks, with over half in grocery category.
• Sam's Club U.S.: Comp sales ex fuel 3.8%, e-commerce sales up 22%, member count and renewal rates growing, curbside pickup free for all members with no minimum purchase requirements, and club fulfilled delivery grew triple digits.

Guidance

• Full Year: Constant currency sales expected to grow 4.8%-5.1%, up from prior 3.75%-4.75%; operating income expected to grow 4.8%-5.5% constant currency; adjusted EPS expected $2.58-$2.63.
• Fourth Quarter: Constant currency sales guidance 3.75%-4.75%; operating income growth 8%-11%; adjusted EPS $0.67-$0.72; currency expected to be a ~100 basis point benefit to fourth quarter reported operating income growth.
• Factors: Reflects confidence in share gains, business mix benefits, but merchandise category mix remains a headwind.

Risks

• Macroeconomic Factors: Consumer environment remains dynamic, with potential pockets of moderation in spending, especially among lower income households.
• Tariffs and Commodities: Impact on certain categories like beef, with ongoing monitoring of commodity price fluctuations and tariff impacts.
• Regulatory Changes: Maximum fair pricing legislation in January could affect health and wellness business, specifically pharmacy.

Q: Importance of marketplace and SKU count?

A: John Furner and Christopher Nicholas discussed importance of broad assortment via marketplace, focus on using AI to ensure complete assortments, and growth in categories like apparel and home hardlines driving marketplace sales.

Q: Impact of maximum fair pricing on health and wellness sales?

A: John Rainey stated it's premature to give a number, but health and wellness business is still expected to grow despite potential impacts in January.