Walmart Inc. (WMT) FY2026 10-K and Q2 FY2027 10-Q Summary

Business

From the fiscal 2026 Form 10-K, accession 0000104169-26-000055.

Walmart describes itself as a people-led, technology-powered omnichannel retailer. It serves approximately 280 million customers weekly across more than 10,900 stores in 19 countries plus its eCommerce sites and mobile applications, and employed approximately 2.1 million associates as of January 31, 2026. Total fiscal 2026 revenues were $713.2 billion, of which net sales were $706.4 billion. Principal offices are in Bentonville, Arkansas. Effective December 9, 2025, the common stock's principal listing moved from the New York Stock Exchange to the Nasdaq Global Select Market, still under the symbol "WMT."

The stated strategy is to make every day easier for busy families, operate with discipline, sharpen culture and become more digital, and make trust a competitive advantage. The pricing philosophy is everyday low prices ("EDLP") funded by everyday low cost ("EDLC"), items priced low every day rather than through frequent promotion, with expense discipline passed through to customers.

Three reportable segments. U.S. and Canadian operations are consolidated on a January 31 fiscal year; all other operations are generally consolidated on a one-month lag and a calendar year.

Walmart U.S. operates under the Walmart and Walmart Neighborhood Market brands plus walmart.com and the Walmart app. Merchandise is organized into three strategic units: grocery; general merchandise (entertainment, hardlines, fashion, home); and health and wellness (pharmacy, OTC, optical). Private brands include Great Value, Equate, Mainstays, bettergoods, Marketside, Ozark Trail, onn., George and Spring Valley; licensed brands include Better Homes & Gardens and The Pioneer Woman. Beyond merchandise, the segment sells advertising to brands and marketplace sellers, supply chain and fulfillment services to marketplace sellers, data analytics to suppliers, plus fuel and financial services (money orders, transfers, check cashing, bill payment, installment lending). Walmart+ membership bundles free shipping with no order minimum, unlimited delivery from store, fuel discounts and Scan & Go.

Walmart International runs wholly-owned subsidiaries in Canada, Chile, China and Africa (Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia) and majority-owned subsidiaries in India and in Mexico/Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua). Formats span supercenters, supermarkets, warehouse clubs, cash and carry and eCommerce (walmart.com.mx, walmart.ca, flipkart.com, PhonePe, samsclub.cn). Pickup and delivery operate from roughly 3,300 locations across its markets. Market-specific private brands include Aurrera and Lider alongside global brands such as Member's Mark and Great Value. The 2018 acquisitions of majority stakes in Flipkart and PhonePe in India anchor the digital footprint there.

Sam's Club U.S. is a membership-only warehouse club; membership income is a significant component of segment operating income. Club membership is $50 annually and Plus membership $110, with add-on memberships at $45 each. Plus members receive free delivery-from-club, free shipping on orders of $50 or more, exclusive discounts and early shopping hours; members earn Sam's Cash rewards. Scan & Go and Just Go remove checkout friction. Merchandise spans grocery, general merchandise, health and wellness, and fuel; the Member's Mark private label is the value anchor.

Ecosystem economics. The recurring theme across segments is that Walmart is layering higher-margin, capital-light businesses onto the retail base: advertising, marketplace and fulfillment services, membership, financial services (including OnePay, the fintech venture through which Walmart and its financial-services partners offer money transfers, digital payments, bill payment, prepaid access, co-branded credit cards, installment lending and earned wage access) and healthcare. Management states explicitly that these offerings are expected to help drive operating income growth faster than net sales over the long term. Fiscal 2026 eCommerce net sales were approximately $99.6 billion at Walmart U.S., $35.8 billion at Walmart International and $15.0 billion at Sam's Club U.S., versus $65.4 billion, $24.8 billion and $9.9 billion respectively two years earlier in fiscal 2024.

Supply chain and footprint. Walmart operates 192 U.S. distribution facilities (shared between Walmart U.S. and Sam's Club U.S.) and 179 international distribution facilities, using a private truck fleet plus common carriers. Of 10,955 total retail units at January 31, 2026, 5,678 were owned and 5,277 leased; internationally the mix inverts (1,486 owned versus 4,257 leased). Total retail square footage was approximately 1.06 billion. During fiscal 2026 Walmart began combining the Sam's Club U.S. supply chain function with Walmart U.S. Pickup or delivery is available at over 8,400 locations globally.

Competition and seasonality. Walmart competes with brick-and-mortar, eCommerce and omnichannel retailers, warehouse clubs, dollar and specialty stores, gas stations and social commerce platforms, as well as with firms in digital advertising, fulfillment and delivery, health and wellness and financial services. The company acknowledges some competitors have longer histories, more customers and greater brand recognition in these adjacent lines, and that smaller internet-based businesses may innovate faster. Historically the fourth quarter (ending January 31) is the highest-volume quarter for every segment.

Leadership. A broad executive transition took effect in February 2026: John Furner became President and Chief Executive Officer (previously CEO of Walmart U.S.); David Guggina became CEO of Walmart U.S.; Christopher Nicholas became CEO of Walmart International; Latriece Watkins became CEO of Sam's Club U.S.; and Dwayne Milum became Senior Vice President and Controller. John David Rainey has been Executive Vice President and Chief Financial Officer since June 2022.

Risk factors

Condensed from Item 1A of the fiscal 2026 Form 10-K, accession 0000104169-26-000055. The 10-Q for the quarter ended July 31, 2026 states that no material change in these risk factors has occurred.

Strategic

• Omnichannel execution and the cost of digital investment. The strategy depends on continuing to build a seamless omnichannel experience across eCommerce, technology, AI, supply chain automation, advertising, acquisitions, joint ventures and new/remodeled stores. Failure on individual components could hurt market position and net sales and could trigger impairment of intangible or other long-lived assets. Walmart also flags a second-order risk: a greater concentration of eCommerce sales, including online grocery and the rising role of AI-enabled platforms in search, discovery, advertising and purchasing, could reduce store and club traffic and therefore the cross-selling those trips generate. The cost of these investments, including operating losses on them, depresses near-term financial performance regardless.
• Failure to read consumer trends. Mispredicting demand produces lower sales, spoilage and markdowns. Reputation risk is treated as part of this: shrink and theft, misuse of AI technologies, biased or flawed AI search results, or a data breach could erode trust quickly; positions taken on social and environmental issues are tracked and can draw boycotts or campaigns from either direction.
• Competition and intellectual property. Retail consolidation, business combinations and competitive omnichannel ecosystems may create rivals with better financial resources and merchandise access. Proprietary-rights protection is not effective in every jurisdiction where Walmart operates.
• Macroeconomic conditions. Higher interest rates, fuel and energy costs, inflation or deflation, unemployment, reduced consumer purchasing power (including from changes to government programs), currency swings, tariffs and trade barriers can all depress demand, shift mix toward lower-margin goods, slow inventory turnover and force markdowns. The same factors raise Walmart's own cost of sales and operating expense, and can damage suppliers' ability to produce at volume.
• Strategic alliances. Investments made through alliances, business relationships or in certain divested markets may not produce anticipated sales or profitability.
• Health crises, natural disasters, climate and geopolitical events. Pandemics, war, civil unrest, terrorism and active-shooter situations (which have occurred in U.S. stores) can close facilities, disrupt supply chains and change purchasing patterns. Walmart bears the majority of adaptation costs and of losses from physical damage, inventory loss and business interruption. Because U.S. operations are such a large share of results, U.S.-concentrated events are disproportionately damaging.

Operational

• Suppliers. Global sourcing exposes Walmart to political and economic instability in supplier countries, supplier financial instability, suppliers unable to fund indemnification obligations, labor problems, raw-material availability, extreme weather affecting commodities, merchandise safety and quality issues, transport availability, cost and security, and currency. Trade policy, tariffs, sanctions and import/export restrictions are explicitly outside the company's control.
• Product quality and safety, both for merchandise Walmart sources directly and for third-party marketplace goods. On marketplace, some regulators and courts take the view that the retailer is responsible for transactions on its platform; the law on retailer responsibility for IP and product-liability claims arising from marketplace transactions is unsettled, and Walmart may not be able to collect damages from third-party sellers.
• Information systems and cybersecurity. Given transaction volume, uninterrupted operation of business-critical systems is essential; systems are not fully redundant and disaster-recovery planning cannot cover every eventuality. Walmart discloses that its systems and those of third-party providers have experienced cybersecurity incidents, including during fiscal 2026, which to date have not had a material adverse effect but for which no assurance of a similar result exists. Advances in AI are called out as intensifying the threat, enabling faster automated attacks, lowering the barrier to sophisticated threats, and creating novel attack categories in which AI systems autonomously conduct reconnaissance, generate exploit code, harvest credentials and craft social-engineering content. Logging capabilities, Walmart's own and third parties', are described as not always complete enough to fully scope a security event. Failure to protect customer, member, associate, partner and vendor information carries HIPAA, state and international breach-notification exposure, payment-card-network liability, remediation costs and claims.
• Health and wellness reimbursement. Retail pharmacy net sales are largely generated through contracts with third-party payers and pharmacy benefit managers. Risks include reimbursement-rate reductions, payer-mix shifts, formulary changes, exclusion from preferred or exclusive pharmacy networks, brand/generic drug-mix shifts, increased governmental focus on drug pricing (most-favored-nation policies, maximum fair price negotiations, direct-to-consumer pharmacy delivery), and changes to or elimination of Medicare Part D or Medicaid drug programs. A supply disruption from a pharmaceutical vendor could severely affect pharmacy operations and drive prescription transfers to competitors.
• Labor. Growth depends on attracting and retaining a large associate base globally against competition from retail, technology, health and wellness and fintech employers; executing organizational changes and senior-management transitions is named as critical. Wage, benefit and labor-law cost increases, including reinterpretations around worker classification, could materially hurt performance.
• Independent contractors and third-party service providers. Qualification processes and background checks may not surface all relevant information; misconduct, fraud or injury caused by contractors creates liability, regulatory and reputational exposure.

Financial

• Market expectations. Management states the stock price generally reflects high market expectations. Missing or delaying consolidated net sales, operating income, growth rates, eCommerce growth, advertising and other higher-margin initiatives, capital expenditures, comparable sales or (adjusted) EPS, or changing the dividend or repurchase programs, or the effective tax rate, could push the price down.
• Foreign exchange. Non-U.S. operations are conducted in local currencies and translated into dollars. Unfavorable rates have in recent years adversely affected reported results, and can also raise cost of sales when merchandise is purchased in a currency other than the one in which it is sold.

Legal, tax, regulatory, compliance and reputational

• International operations. Approximately 19% of fiscal 2026 consolidated net sales were generated by Walmart International. Named exposures include political instability, foreign-ownership and eCommerce/retail restrictions such as those in India, nationalization or trade-protection measures, and antitrust and competition matters underway in Canada, Mexico and India (the latter relating to Flipkart). Foreign Corrupt Practices Act and sanctions compliance is called out where local business customs may conflict with U.S. law.
• Tax and trade law. Walmart U.S. and Sam's Club U.S. together generated approximately 82% of fiscal 2026 consolidated net sales, and a significant share of the general merchandise sold in U.S. stores and clubs is manufactured abroad. The 10-K states plainly that Walmart experienced the impacts of incremental import tariffs during fiscal 2026, expects the dynamic tariff environment to continue including in fiscal 2027, and cannot predict the future impact with certainty, which could be material. Separately, the OECD Global Minimum Tax (Pillar Two) is now effective in many jurisdictions where Walmart operates and continues to evolve.
• Litigation. Walmart operates in what it calls a highly regulated and litigious environment, and is increasingly named in cases alleging novel theories of personal injury or economic loss from consumer products (multidistrict litigation on acetaminophen and baby food is cited), wage-and-hour class and collective actions, and antitrust and consumer-protection class actions over retail prices and supplier cost negotiations, including matters related to the wholesale purchase and retail sale of batteries and soft drinks. Insurance-related liabilities (workers' compensation, general liability, auto, product liability and certain employee healthcare benefits) are funded predominantly through self-insurance, so a significant rise in claim costs falls on the company.
• Sector-specific regulation covering pharmacy licensing, controlled substances (DEA and state), Medicare/Medicaid reimbursement, HIPAA and health-data protection, plus anti-money-laundering, consumer-financial-protection and sanctions requirements attaching to money transfers, bill payment, prepaid access, co-branded credit cards, limited cryptocurrency and equity investment products, installment lending and earned wage access offered through financial partners and OnePay.
• Exclusive forum. The bylaws designate the Delaware Court of Chancery as the sole forum for certain shareholder and derivative claims, which may raise the cost of bringing claims, or, if held unenforceable, raise Walmart's cost of resolving them elsewhere.

Cybersecurity governance (Item 1C). The Board has delegated oversight of information systems, information security, data privacy and cybersecurity to the Audit Committee, which receives periodic updates from the Chief Information Security Officer and Chief Technology Officer. The CISO leads the Information Security organization and oversees the program, including for recently acquired and non-wholly-owned subsidiaries whose systems have not been fully integrated into Walmart's networks. Incidents crossing established thresholds are escalated to senior management and the Audit Committee and analyzed for external reporting requirements.

Legal proceedings of note (Item 3 and Note 9). Prescription opiate litigation and the DOJ opioid civil litigation; opioids-related securities class actions and False Claims Act litigation; the Asda Equal Value Claims, for which Walmart retains an indemnification obligation after the February 2021 divestiture; a Middle District of Pennsylvania investigation into consumer fraud prevention and anti-money-laundering compliance for money transfer agent services; the Driver Platform Matters, of which the FTC and state attorneys general litigation (Federal Trade Commission, et al. v. Walmart Inc., N.D. Cal., filed February 26, 2026) was resolved by a stipulated order entered March 3, 2026 while related government investigations and driver-classification civil litigation remain open, as set out below; a COFECE quasi-judicial process against Walmex in Mexico; Directorate of Enforcement show-cause notices to Flipkart on India's foreign direct investment rules; and an India antitrust matter before the Competition Commission of India. On the environmental side, Walmart received a Finding of Violation from the U.S. EPA in October 2023 alleging Clean Air Act violations connected to its refrigeration leak detection and repair program; the EPA could seek penalties in excess of $1 million.

Management's discussion and analysis, fiscal 2026

From Item 7 of the fiscal 2026 Form 10-K, accession 0000104169-26-000055 (year ended January 31, 2026).

Consolidated results

Total revenues rose $32.2 billion, or 4.7%, driven by net sales growth of $31.9 billion (4.7%). Growth came from strong comparable sales across the U.S. segments and international markets, led in fiscal 2026 by average ticket and transactions with growth in unit volumes; eCommerce was strong in both years, grocery and health and wellness were strong, and fiscal 2026 also benefited from improved general merchandise sales. Currency translation was a $2.8 billion headwind to net sales (versus $3.2 billion in fiscal 2025). Membership and other income rose $0.3 billion, driven by global membership fee revenue growth partly offset by lower recycling income.

The gross profit rate rose 8 basis points, primarily on disciplined inventory management at Walmart U.S. and growth in higher-margin businesses globally, partly offset by mix shift into lower-margin merchandise and by channel and format mix shifts at Walmart International.

Operating expenses as a percentage of net sales rose 20 basis points, and the drivers are specific and largely one-off or cost-inflation in character: approximately $0.9 billion of higher self-insured general liability claims expense in the U.S., influenced by rising costs to resolve claims across retail and related industries; a $0.7 billion charge related to modification of certain share-based compensation arrangements at the PhonePe subsidiary, made in contemplation of a potential public offering; and increased depreciation on capital investments. The net effect was that operating margin fell 13 basis points even as operating income rose, the first such decline after a 15 basis-point improvement in fiscal 2025.

Below the operating line, other gains and losses swung to a net gain of $2.1 billion from a net loss of $0.8 billion, driven by fair-value changes on equity and other investments. The effective tax rate was 24.4% (23.4% in fiscal 2025, 25.5% in fiscal 2024); the increase was primarily due to the PhonePe share-based compensation charge, which provided no tax benefit. Consolidated net income of $22.3 billion was up $2.1 billion.

Segment results

Walmart U.S. net sales rose $20.6 billion (4.4%) on 4.3% comparable sales, driven by average ticket and transactions with growth in unit volumes and strength across all merchandise categories. eCommerce contributed approximately 4.3 percentage points to comparable sales (2.9 points in fiscal 2025), driven primarily by store-fulfilled pickup and delivery. Gross profit rate rose 22 basis points on disciplined inventory management and higher-margin business growth. Operating expense rate rose 15 basis points on self-insured general liability claims and depreciation. Segment operating income rose $1.3 billion.

Walmart International net sales rose $8.5 billion (7.0%), including eCommerce growth of $6.3 billion, offset by a $2.8 billion currency headwind. Gross profit rate fell 49 basis points on channel and format mix shifts and strategic investments in price and delivery capability. The operating expense rate rose 10 basis points on the $0.7 billion PhonePe charge. Segment operating income declined $0.4 billion, the one segment that went backwards in fiscal 2026, and almost entirely attributable to the PhonePe charge.

Sam's Club U.S. net sales rose $2.8 billion (3.1%) on 2.9% comparable sales including fuel, with growth in unit volumes and transactions across grocery, health and wellness and general merchandise. Lower fuel prices cut 1.9 points from comparable sales. eCommerce contributed approximately 3.3 points. Membership and other income rose 8.7%, on membership base growth and Plus penetration plus additional breakage income on unredeemed Sam's Cash rewards. Gross profit rate rose 4 basis points; the operating expense rate rose 22 basis points on lower fuel sales and self-insured general liability claims. Segment operating income rose slightly. Excluding fuel, net sales were $83.7 billion (up 5.0%) with operating income of $1.8 billion.

Returns

Return on assets was 8.2% in fiscal 2026 versus 7.9% in fiscal 2025, the increase driven by higher net income (helped by investment fair-value gains) partly offset by higher average total assets from property and equipment purchases. Return on investment, a non-GAAP measure Walmart defines as trailing-twelve-month operating income plus interest income, depreciation and amortization and rent, over average invested capital, fell to 15.1% from 15.5%, the decline driven by higher average invested capital from capital spending, with the PhonePe charge and certain legal and restructuring charges offsetting the benefit of improved operating income. This is the clearest signal in the fiscal 2026 MD&A that the capital-spending step-up has not yet earned its keep.

Cash flow and capital allocation

Operating cash flow rose $5.1 billion on higher operating income, lower cash tax payments and timing of certain payments. Free cash flow rose despite a $2.9 billion increase in capital expenditures. Of the $26.6 billion of fiscal 2026 capital expenditures, $16.5 billion went to supply chain, customer-facing initiatives, technology and other; $5.6 billion to store and club remodels; $1.4 billion to new stores and clubs including expansions and relocations; and $3.2 billion to Walmart International. Investing outflows increased $5.0 billion, mainly on the change in proceeds from sales of strategic investments and higher property and equipment payments, against a prior-year comparison that included the VIZIO acquisition for net consideration of $1.9 billion.

Cash and cash equivalents were $10.7 billion at January 31, 2026 (versus $9.0 billion), of which $3.9 billion may not be freely transferable to the U.S. The working capital deficit widened to $22.6 billion from $17.1 billion, which Walmart attributes to payment timing and higher short-term borrowings; the company states it generally operates with a working capital deficit by design. Short-term borrowings were $6.6 billion at 4.0% weighted-average rate (versus $3.1 billion at 5.3%), with $15.0 billion of undrawn committed U.S. lines of credit. Total long-term debt rose $2.2 billion to $38.2 billion. Unrecorded purchase obligations were $41.4 billion, $18.3 billion of it due within one year. Estimated contractual interest on long-term debt totals $17.3 billion, roughly $1.7 billion payable in fiscal 2027.

Dividends paid were $7.5 billion (versus $6.7 billion and $6.1 billion). Walmart repurchased $8.1 billion of stock in fiscal 2026, up $3.6 billion year over year, which management attributes to opportunistic prices in the first quarter. All fiscal 2026 repurchases were under the $20.0 billion authorization approved in November 2022, of which $4.0 billion remained at January 31, 2026; in February 2026 the Board approved a new $30.0 billion authorization with no expiration, replacing the prior program's remaining capacity beginning February 23, 2026.

Guidance set in the 10-K. For fiscal 2027 Walmart projected capital expenditures of approximately $25 billion to $27 billion, focused on technology, supply chain and customer-facing initiatives. Effective February 19, 2026 the Board approved the fiscal 2027 annual dividend of $0.99 per share, up from $0.94.

Macroeconomic framing. Management expects continued uncertainty from tariffs and trade restrictions, inflation, currency swings, consumer confidence, employment trends, fuel price volatility and supply chain pressure. It notes that less than one third of what Walmart sells in the U.S. is imported, with most imports from China, Mexico, Vietnam, India and Canada. The July 2025 One Big Beautiful Bill Act introduced 100% bonus depreciation on qualified property and full expensing of R&D; its impact on income tax expense and the effective tax rate was not material, though certain provisions decreased cash taxes paid in fiscal 2026 and may change the timing of future cash tax payments.

Current quarter, second quarter of fiscal 2027 (three months ended July 31, 2026)

From the Form 10-Q for the quarter ended July 31, 2026, accession 0000104169-26-000154, and the earnings release furnished on Form 8-K, accession 0000104169-26-000145 (August 20, 2026).

The tariff refund is the quarter's central fact

During the quarter ended July 31, 2026, Walmart received approximately $2.9 billion in tariff refunds through the process established by U.S. Customs and Border Protection for tariffs the company paid as importer of record under the International Emergency Economic Powers Act. The refunds were recorded as a reduction to cost of sales, fell primarily in the Walmart U.S. segment, and represent substantially all of the refunds Walmart requested. Walmart accounts for such refunds as gain contingencies, recognizing recovery when the gain is realized or realizable and the related contingencies are substantially resolved.

Management states that a significant portion of the refunds was reinvested into customer-focused initiatives during the quarter, primarily through price investment and other cost-mitigation strategies, with continued prioritization of price investment expected through fiscal 2027. The CFO's guidance commentary asks readers to consider second- and third-quarter performance together in order to see the underlying growth rate, an explicit acknowledgment that the refund pulled margin into Q2 and the reinvestment pushes cost into the second half.

Reported results

Total revenues rose $10.5 billion, or 5.9%, in the quarter (up 5.1% in constant currency per the earnings release) and $22.7 billion, or 6.6%, over six months. Growth came from positive comparable sales in the U.S. segments and international markets, driven by transactions. eCommerce net sales grew $8.2 billion, or 23%, in the quarter and $16.7 billion, or 24%, over six months, primarily on store- and club-fulfilled delivery. Currency was a tailwind for once, positively affecting net sales by $1.5 billion in the quarter and $3.9 billion over six months. Membership and other income rose 11.2% in the quarter on global membership income growth; the earnings release puts global membership fee revenue growth at 17% and global advertising growth at 38%.

The gross profit rate rose 96 basis points in the quarter and 53 basis points over six months, primarily on the tariff refunds, partly offset by price investments and higher fuel costs within the supply chain, with a further benefit from higher-margin businesses including advertising. Operating expenses rose 11 basis points as a percentage of net sales in the quarter, driven by higher self-insured general liability claims expense (again attributed to rising costs to resolve claims across retail and related industries), increased depreciation on capital investments, and higher associate healthcare benefit costs from increased enrollment and medical cost inflation, partly offset by lapping $0.4 billion of prior-year legal charges. Operating margin expanded 89 basis points.

Why net income fell while operating income rose 28.8%. Two items below the operating line explain the divergence and both are worth isolating:

• Investment marks. Other gains and losses were a net loss of $1.2 billion in the quarter versus a net gain of $2.7 billion a year earlier, driven by fair-value changes on equity and other investments tracking their underlying stock prices. That $3.9 billion swing more than consumed the $2.1 billion operating income increase.
• Unrecognized tax benefits. During the quarter Walmart recorded a $0.4 billion benefit to income tax expense and a $0.5 billion reduction of interest expense related to changes in unrecognized tax benefits. This is why the effective tax rate fell to 18.5% (from 23.3%) and why interest on debt dropped to $137 million from $651 million. Both are non-recurring in character.

The earnings release frames adjusted EPS of $0.81 as excluding, net of tax, a $0.12 net loss on equity and other investments and a $0.11 net benefit from a certain tax matter, so on management's own arithmetic the tax item was worth roughly as much to the quarter as the investment marks cost it. Adjusted operating income growth was 17.4% in constant currency versus the 28.8% reported figure.

Segment detail

Beginning in February 2026 Walmart updated its segment allocation methodology for certain corporate overhead allocations and revised prior-period amounts for comparability.

Walmart U.S. net sales rose $4.3 billion (3.5%) on comparable sales of 3.3% (calendar basis; 2.6% excluding fuel on the retail-calendar basis used in the earnings release), driven by transactions and average ticket with strength in grocery. Health and wellness declined, because of maximum fair price regulation on certain prescription drugs effective January 2026, the earnings release quantifies this as a 125 basis-point headwind to comparable sales from pharmacy deflation. eCommerce contributed approximately 4.9 points to comparable sales and eCommerce net sales were approximately $29.4 billion in the quarter (versus $23.7 billion), up 24%. Advertising rose 38% overall, including a 43% increase at Walmart Connect excluding VIZIO. Gross profit rate rose 158 basis points on tariff refunds and business mix, against price investments and higher fuel costs. Operating expenses deleveraged 72 basis points. Segment operating income rose $1.4 billion, or 20.6%. Membership fee revenue grew double digits with Walmart+ net adds at a record second-quarter high.

Walmart International net sales rose $4.0 billion (12.8%), of which $1.5 billion was currency, 7.9% growth in constant currency. eCommerce grew $1.6 billion (19%), and the segment's eCommerce net sales were approximately $9.9 billion. By market, Mexico and Central America contributed $14.3 billion, China $7.4 billion (up from $5.8 billion), Canada $6.4 billion and other markets $7.1 billion. Gross profit rate fell 15 basis points on price investments, format mix and a discrete sales-related reserve, partly offset by improved eCommerce margins. Operating expenses leveraged 29 basis points on cost discipline. Segment operating income rose $0.2 billion (16.6% reported, 5.7% in constant currency), helped by lower eCommerce losses. Advertising grew 20%, led by Flipkart Ads.

Sam's Club U.S. net sales rose $2.1 billion (8.8%), or 4.5% excluding fuel, on comparable sales including fuel of 8.6%, of which 4.2 points came from higher fuel sales on higher prices and volumes. Transactions rose 7.0% while average ticket fell 2.5%. eCommerce contributed roughly 3.1 points to comparable sales, with eCommerce sales up 26% and eCommerce net sales of approximately $4.7 billion. Membership fee revenue grew 6%; annual membership fees were increased effective May 1, 2026, and fees are deferred and recognized ratably over the one-year term, so the benefit phases in. Gross profit rate rose 45 basis points on tariff refunds, against price investments and higher club-fulfilled delivery shipping and fulfillment costs. Segment operating income rose $0.2 billion. Inventory rose 8.0%, related to higher fuel costs and volumes including fuel upstreaming with a strategic partner.

Balance sheet, cash flow and capital returns

The 10-Q presents cash flow statements for the six months ended July 31, 2026 only; there is no three-month cash flow statement in that filing, so the cash flow figures below are six-month figures as printed in that 10-Q.

For the six months ended July 31, 2026, net cash provided by operating activities was $19.7 billion (10-Q; $19,710 million), an increase of $1.4 billion over the prior-year six-month period, driven by higher cash from operating income partly offset by inventory receipt timing. Payments for property and equipment over the same six months were $14.2 billion ($14,181 million), producing free cash flow of $5.5 billion, a decrease of $1.4 billion, because capital expenditures rose $2.8 billion. Net cash used in investing activities was $14.3 billion for the six months (up $3.1 billion) and net cash used in financing activities was $4.8 billion (down $2.2 billion, on higher short-term borrowings and lower share repurchases, offset by increased debt repayments).

Capital expenditures on a quarterly basis are disclosed in the 10-Q segment note: $7,497 million for the three months ended July 31, 2026 versus $6,423 million a year earlier, of which Walmart U.S. was $5,442 million. Six-month capital allocation was $7.7 billion to supply chain, customer-facing initiatives, technology and other; $3.6 billion to store and club remodels; $1.1 billion to new stores and clubs; and $1.8 billion to Walmart International.

At July 31, 2026 the balance sheet showed cash and cash equivalents of $11.5 billion (versus $10.7 billion at January 31, 2026), inventories of $61.6 billion (up 6.7% year over year, or 6.0% in constant currency), total assets of $293.9 billion, short-term borrowings of $10.5 billion (versus $6.6 billion at year end), long-term debt of $36.5 billion plus $3.5 billion due within one year, and total shareholders' equity of $104.5 billion. The earnings release puts total debt, including finance lease obligations, at $57.2 billion. The working capital deficit widened to $26.9 billion from $21.5 billion a year earlier, driven by higher short-term borrowings and payment timing.

Trailing-twelve-month return on assets was 8.0% (down from 8.3%), reflecting fair-value declines on equity and other investments and a higher asset base; trailing-twelve-month return on investment improved to 15.4% from 15.1% on higher operating income.

Financing activity. In April 2026 Walmart renewed and extended its 364-day revolving credit facility of $10.0 billion and its five-year facility of $5.0 billion, for $15.0 billion of committed U.S. lines of credit at July 31, 2026, all undrawn. The April 30, 2026 senior unsecured note issuance produced net proceeds of $4,230 million, at fixed coupons ranging from 4.000% to 4.750% on maturities from 2029 to 2036 plus one floating-rate tranche. Against that, Walmart repaid $2,303 million of maturing long-term debt during the six months (€650 million 2.550% notes due April 8, 2026; $750 million 4.000% notes due April 15, 2026; $799 million 3.050% notes due July 8, 2026), so total long-term debt rose $1.8 billion over the six months, well short of the gross issuance. Supplier financing program obligations were $6.4 billion at July 31, 2026, versus $6.0 billion at January 31, 2026 and $5.7 billion a year earlier.

Capital returns. Dividends paid over the six months were $3,945 million; the fiscal 2027 annual dividend of $0.99 per share is paid in four quarterly installments of $0.2475. Share repurchases over the six months were $5,104 million (42.3 million shares), down $1.1 billion from the prior-year period, which had benefited from opportunistic prices in the first quarter of fiscal 2026. As of July 31, 2026, $25.1 billion remained under the $30 billion authorization approved in February 2026. Diluted weighted-average shares outstanding fell to 7,978 million in the quarter from 8,016 million.

Legal developments this quarter

Two long-running matters moved to resolution. The Department of Justice opioid civil litigation (filed December 22, 2020 in the District of Delaware, alleging unlawful dispensing and distribution of controlled substances in violation of the Controlled Substances Act) has been settled without admission of liability for an immaterial amount, accrued as of July 31, 2026. The False Claims Act qui tam litigation brought by two former Walmart pharmacists has likewise been settled without admission of liability for an immaterial amount, accrued as of July 31, 2026. In the opioid MDL, final approval of a settlement resolving the claims of a nationwide class of third-party payors is pending with the court, and one case brought by a hospital system has been selected as a bellwether. In the Florida Health Sciences Center case, a jury trial ended in a mistrial and the court then granted a directed verdict and entered judgment in Walmart's favor; plaintiffs have appealed.

The Driver Platform Matters, the payment and operational practices of the Spark Driver platform, litigated as Federal Trade Commission, et al. v. Walmart Inc. (N.D. Cal.), are only partly resolved. The complaint was filed February 26, 2026 and the stipulated order settling it with the FTC and certain states was entered March 3, 2026, both after the January 31, 2026 fiscal year end and before the fiscal 2026 10-K was filed on March 13, 2026; the approximately $37 million unsuspended portion of the judgment was accrued as of January 31, 2026. Without admitting liability, Walmart agreed to entry of a $100 million judgment plus programmatic practice and reporting obligations for ten years, of which approximately $63 million was suspended to reflect amounts already paid to drivers and other consideration in the settlement. The 10-Q adds that Walmart has now agreed settlement terms with certain other states, where the 10-K had described those discussions as continuing. What the order does not cover: Walmart continues to respond to subpoenas, information requests and governmental investigations into driver payment, independent-contractor classification and platform operations, and is defending putative representative civil litigation and arbitration claims over driver classification, on which it says it cannot reasonably estimate a loss or range of loss.

Still open: the Asda Equal Value Claims, brought by approximately 77,000 current and former Asda store employees, where the first two of three phases are complete and the phase-three hearing is scheduled to begin November 23, 2026, Walmart divested Asda in February 2021 but continues to oversee the defense and has agreed to indemnify certain claims up to a contractually determined amount. Also open: the Money Transfer Agent Services investigation; the Mexico antitrust matter, where COFECE imposed a penalty of 93.4 million pesos (approximately $5 million) on a Walmex subsidiary in December 2024 for a single relative monopolistic practice, now under appeal with payment stayed; the India Foreign Direct Investment show-cause notices to Flipkart, primarily addressing 2009–2015, before Walmart's 2018 majority acquisition; and the India antitrust matter before the Competition Commission of India, where the Director General's investigation report alleging competition law violations was received by Flipkart subsidiaries in September 2024.

Guidance issued August 20, 2026

Walmart raised its fiscal 2027 outlook alongside second-quarter results.

Third quarter fiscal 2027 (measured against Q3 FY2026 net sales of $177.8 billion, adjusted operating income of $7.3 billion and adjusted EPS of $0.62):

Management flags a headwind of over 100 basis points to third-quarter sales growth from a timing shift of Flipkart's Big Billion Days between the third and fourth quarters, and states that the operating income outlook reflects continued prioritization of the Q2 tariff refunds into customer experience and price investments in the second half.

Fiscal 2027 full year (measured against FY2026 net sales of $706.4 billion, adjusted operating income of $31.0 billion and adjusted EPS of $2.64):

The capital expenditure line moved with the raise: roughly 4.0% of guided fiscal 2027 net sales is a materially larger absolute spend than the approximately $25–27 billion the 10-K projected in March 2026. Trailing-twelve-month return on investment has since recovered to 15.4% from 15.1%, though that trailing window includes the tariff-refund quarter; the question the larger capital plan raises is prospective, whether the incremental invested capital earns its keep once the refund benefit rolls out of the trailing period.

Other disclosure. Under Section 13(r) of the Exchange Act, Walmart disclosed two immaterial retail transactions during the quarter: a roughly $25 sale on July 9, 2026 by Makro, a division of Massmart Retail (Pty) Ltd., to an individual who appears to have been purchasing on behalf of the Embassy of Iran; and a roughly $1,500 sale of food and general merchandise by Sam's Club Mexico on July 28, 2026 to an individual sanctioned under Executive Order 13224. Walmart states it does not plan to continue selling to either individual.

Subsequent events

The Form 10-Q for the quarter ended July 31, 2026 (accession 0000104169-26-000154) contains six notes, significant accounting policies, net income per common share, short-term borrowings and long-term debt, fair value measurements, contingencies, and segments and disaggregated revenue, and no subsequent events note. The company disclosed no post-period acquisition, divestiture, financing or litigation settlement in that filing.

The fiscal 2026 Form 10-K's own subsequent-events note (Note 12, accession 0000104169-26-000055) covered a single item, the February 19, 2026 dividend increase described above.

Material events after the July 31, 2026 quarter end that are on the record elsewhere in these filings:

• August 20, 2026, second-quarter results and raised fiscal 2027 outlook, furnished on Form 8-K, accession 0000104169-26-000145. The revised guidance is set out in the Current quarter section above.
• Opioid case counts as of August 21, 2026. The 10-Q's legal proceedings disclosure states that the opioid MDL in the Northern District of Ohio included approximately 118 cases with claims against Walmart as of August 21, 2026, with 15 other opioid-related cases pending in U.S. state and federal and Canadian courts as of the same date. Only the MDL count is materially lower: it stood at approximately 230 as of March 6, 2026 in the fiscal 2026 10-K, and the decline reflects the settlements and dispositions described above. The count of other opioid-related cases moved the other way, rising from 13 to 15 over the same span, which is why two matters are newly listed, Plumbers' Local Union No. 690 Industry Funds, et al. v. Purdue Pharma L.P., et al., filed in the Philadelphia County Court of Common Pleas on July 27, 2026, and Takoma Regional Hospital, Inc., et al. v. Purdue Pharma L.P., et al., a 2019-filed case in the Greene County, Tennessee Circuit Court. The list also picks up appeal-stage re-listings, including the Florida Health Sciences Center appeal noted above.
• Asda Equal Value Claims phase three is scheduled to begin before the Manchester Employment Tribunal on November 23, 2026.

No acquisition or divestiture, and no new financing, was disclosed by Walmart as occurring after July 31, 2026 in any of the filings covered here.