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Call sheet · Q1'26

Walmart (WMT)

Q1'26 earnings call · held 2025-05-15 · compared with the Q4'25 call · management-credibility review
9/12
Disclosure score
5 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is RIM accounting - Walmart's retail inventory method will create 'unprecedented' earnings volatility as tariff costs hit existing inventory, potentially inflating Q2 margins before reversing in Q3/Q4. While everyone focuses on the eCommerce profitability milestone (which is real and impressive), the bigger near-term story is that Walmart literally can't guide quarterly operating income anymore because the range is 'too wide to be credibly reliable.' The binding constraint isn't demand or competition - it's tariff policy uncertainty making inventory decisions impossible to forecast. JDR's warning that they may not achieve full-year guidance if 'dramatically higher tariff levels' persist is the most bearish thing I've heard from Walmart management in years. My view changes if they restore quarterly operating income guidance next quarter or if trade negotiations provide clarity on final tariff levels.

The 30-second version

  • RIM accounting is the real story: markups on existing inventory could create unprecedented earnings volatility
  • eCommerce profitability milestone achieved but guidance suggests deceleration ahead
  • They won't guide Q2 operating income because the range is too wide to be 'credibly reliable'

What changed this quarter

MetricQ4'25Q1'26Change
Total RevenueQ4: $173.4B (+5.7% YoY)Q1: $169.3B (+4.0% YoY)140bp deceleration
eCommerce GrowthQ4: 16% globallyQ1: 22% globally600bp acceleration
Walmart US CompQ4: 4.6%Q1: 4.5%10bp deceleration, stable
Sam's Club US Comp ex-fuelQ4: 6.8%Q1: 6.7%10bp deceleration, stable
International Sales Growth (constant currency)Q4: 5.7%Q1: 7.8%210bp acceleration
Advertising Revenue GrowthQ4: 29% globallyQ1: 50% globally (including VIZIO)2100bp acceleration (inflated by VIZIO)
Walmart Connect Growth (US, ex-VIZIO)Q4: 24%Q1: 31%700bp acceleration on apples-to-apples
Membership Income GrowthQ4: 16% across enterpriseQ1: 15% across enterprise100bp deceleration
Operating Income Growth (constant currency)Q4: 9.4%Q1: 3%640bp deceleration
Inventory GrowthQ4: 2.8%Q1: 3.8%100bp increase

Accountability tracked

8 new promises made6 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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