Key Points

  • Walmart reported on Thursday that revenue for the first quarter of fiscal 2026 increased 2.5% year-over-year to $165.6 billion, operating profit rose 4.3% to $7.1 billion, and consolidated net income was $4.6 billion, down 12.6% year-over-year.
  • Walmart U.S. sales increased 3.2% year-over-year to $112.2 billion, with comparable sales excluding fuel up 4.5%. U.S. e-commerce sales grew 21%, driven by strong performance in delivery, store fulfillment, advertising, and marketplace.
  • CEO Doug McMillon said on the analyst call: "We are prepared to handle the cost pressures from tariffs as well as any peer. But even with some tariff reductions, higher tariffs will still lead to price increases."

Deep Dive

Despite some temporary tariff reductions announced this week, Walmart executives believe the increased tariffs remain too high.

McMillon said: "We cannot absorb all the pressure." But he promised the company "will do its best to keep prices as low as possible."

In food and consumer goods, consumers are already feeling the pressure, so managing cost pressures is especially important. Groceries are a key financial driver for the big-box retailer—the company recently noted that this category is one of the main contributors to U.S. comparable sales growth.

One of Walmart's strengths lies in replenishable goods, and the company says it has deep relationships with suppliers to navigate volatile markets and policies. However, a bigger challenge will come in the coming months when the company needs to make merchandise sourcing decisions for holidays like Halloween and Christmas.

"How do you determine purchase quantities? Which tariff figure do you use? The best answer we can give is that we have a sales plan," McMillon said. "We have made some assumptions about tariffs, and then we will work with suppliers to move forward. If we need additional merchandise, we will go chase it."

The big-box retailer highlighted its strong existing relationships with local businesses—more than two-thirds of the products it sells in the U.S. are made, assembled, or grown in the U.S. Nearly 60% of its U.S. suppliers are small businesses, and the company recently launched the "Grow with US" program to provide training, mentorship, and resources to national businesses.

As tariff impacts continue to unfold, Walmart has advanced long-term strategies including store upgrades. Earlier this year, the first Supercenter in four years opened as part of a multi-million-dollar modernization plan.

"Store renovations, especially the latest iterations, are significant because they create stronger value messaging," said Neil Saunders, managing director at GlobalData, in emailed comments. "Walmart has no intention of giving up or weakening its low-price leadership. However, it finds that by improving displays and visual standards, combined with low prices, it can present a more compelling value image."

Other investments are also beginning to pay off, with Walmart U.S. achieving e-commerce profitability for the first time in the first quarter. Sam's Club e-commerce sales grew 27%.