Walmart's Q3 revenue increased by 5.8% year-on-year, with e-commerce sales growing by 27%, becoming a highlight, and raising performance expectations for the second consecutive quarter | Earnings Report Insights

Walmart raises its earnings forecast for fiscal year 2026, reflecting the continued strong growth momentum of the world's largest retailer in an environment of economic uncertainty. This upward revision comes against the backdrop of Walmart's strong performance in the third quarter: Q3 adjusted earnings per share and revenue both exceeded market expectations.

Key Financial Indicators

Q3 revenue was $179.5 billion, a year-on-year increase of 5.8%, higher than the market estimate of $177.57 billion;

Adjusted operating income reached $7.2 billion, also exceeding analysts' expectations of $7.03 billion;

Adjusted earnings per share reached $0.62, surpassing the market expectation of $0.60.

After achieving sales growth in the third fiscal quarter, Walmart raised its full-year sales and earnings forecast. Double-digit e-commerce growth and an influx of new customers across income tiers drove this performance. The retail giant's optimistic outlook stands in stark contrast to the cautious attitudes of peers like Target and Home Depot.

The financial report shows that Walmart expects full-year net sales to grow by 4.8% to 5.1%, up from the previous forecast of 3.75% to 4.75%. Adjusted earnings per share are expected to be between $2.58 and $2.63, slightly up from the previous range of $2.52 to $2.62. This marks the second consecutive quarter that Walmart has raised its full-year forecast.

Chief Financial Officer John David Rainey stated that consumer habits did not change this quarter, with shoppers still selectively spending and seeking bargains. He noted that regardless of the economic backdrop or the company's own strategic adjustments, Walmart is attracting "value-seeking" customers across income tiers.

As a retail giant attracting shoppers from all income levels, Walmart is seen as an important indicator of the health of American consumers and how Trump's tariff policies affect consumer prices. Like other retailers, Walmart has indicated price increases on certain goods to offset higher costs due to tariffs.

Rainey stated during Thursday's conference call that regarding higher tariff costs, "the pressure is real." However, he noted that the Walmart team has been able to find ways to absorb some of the costs to reduce the impact on customers.

Walmart also announced that it will move its common stock listing from the New York Stock Exchange to Nasdaq on December 9, with the stock ticker remaining "WMT." As of Wednesday's close, Walmart's stock price has risen about 11% year-to-date, slightly trailing the nearly 13% increase of the S&P 500 index.

Strong E-commerce Growth, Advertising Business Becomes New Growth Engine

The financial report shows that for the three months ending October 31, Walmart's net profit increased to $6.14 billion, or $0.77 per share, up from $4.58 billion or $0.57 per share in the same period last year.

Excluding one-time items, adjusted earnings per share were $0.62, exceeding analysts' expectations of $0.60. Revenue increased from $169.59 billion in the same period last year to $179.5 billion, surpassing the expected $177.43 billion E-commerce business becomes a growth highlight. Global e-commerce sales increased by 27%, with all business segments achieving significant growth. E-commerce sales in the U.S. market grew by 28%, driven by an increase in store delivery orders as well as growth in advertising and third-party markets. International e-commerce sales surged by 26%, with Sam's Club growing by 22%.

Walmart's comparable sales in the U.S. (excluding fuel) increased by 4.5%, exceeding the analyst expectations of 4% as per StreetAccount. Sam's Club's comparable sales grew by 3.8%. Customer traffic in the U.S. market increased by 1.8%, and average transaction value rose by 2.7%.

With the increase in digital traffic and the expansion of third-party markets, advertising has become an important growth area for Walmart.

The financial report shows that global advertising business grew by 53% this quarter, including contributions from the smart TV manufacturer Vizio, acquired for $2.3 billion last year. Walmart Connect's advertising business in the U.S. grew by 33% year-on-year.

High-income customers continue to flock in

Rainey stated that in recent years, high inflation has led to rising grocery prices, prompting more high-income customers to turn to Walmart for price discounts.

This trend continued in the latest quarter, with these customers also responding positively to store renovations and faster delivery services.

Delivery speed has become a key factor in attracting customers. Walmart can currently deliver goods to about 95% of U.S. households within three hours. About one-third of online orders choose one-hour or three-hour delivery, with related fast delivery revenue increasing by 70% year-on-year.

Rainey noted that even low-income shoppers favor this service. During the weeks when the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) was paused in November, Walmart noticed a decline in fast delivery volume.

He stated that the pause in SNAP benefits during the government shutdown impacted the company, but "as people regain access to these funds, the situation is rebounding."

Quite optimistic about the holiday season

Walmart's strong performance contrasts with Target, Home Depot, and Lowe's. These three retailers all lowered their full-year profit expectations this week, mentioning that consumers are hesitant about large purchases and eager for discounts.

On the other hand, TJX, the parent company of T.J. Maxx and Marshalls, raised its full-year expectations, stating that it achieved a "strong holiday season start" by catering to value-conscious shoppers.

Rainey stated, Walmart is "quite optimistic about the holiday season," claiming the company is ready with competitive price points.