Walmart (NYSE:WMT | WMT Price Prediction) stock is down 8% to $105.45 in early Thursday trading after the company posted Q2 FY27 results. At the same time, the SPDR S&P Retail ETF (NYSEARCA:XRT) is down 2% to $87, and the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.5% to $765.32.
Walmart’s peer names are absorbing sympathy pressure without breaking. Target (NYSE:TGT) stock is down less than 1% to $158.40, while Costco (NASDAQ:COST) stock is down 2% to $938.60.
Walmart shares are absorbing several times more selling than the retail ETF and roughly fourteen times more than the broad market fund. That points to a company-specific reaction rather than a sector rotation, which is why XRT holding a modest decline is a meaningful indicator.
Slowest Same-Store Sales Since 2020 Overshadows a Raise
[stock_chart symbol=”WMT”]
Walmart reported Q2 revenue of $187.9 billion, up 6% year over year and above the roughly $186 billion consensus. Adjusted EPS came in at $0.81 versus a $0.74 estimate. Yet the headline that mattered was Walmart U.S. same-store sales, which grew 2.6% against a 3.7% forecast.
That’s the slowest pace at Walmart U.S. since Q4 2020 and down from 4.6% a year earlier, while Sam’s Club comparable sales growth eased to 4.4% from 5.9%. Cheaper drug prices weighed on the print, tied to legislation letting Medicare negotiate prices; excluding health and wellness, core merchandise comps grew 3.4% and global e-commerce sales rose 23%.
Walmart’s forward guidance did the real damage. Q3 outlook calls for net sales growth of 3% to 3.75% in constant currency and adjusted EPS of $0.62 to $0.64, below the $0.68 estimate. CFO John David Rainey attributed part of the shortfall to a timing shift in Flipkart’s Big Billion Days sale between Q3 and Q4, a headwind of more than 100 basis points to Q3 sales growth.
Walmart owns an 81.3% stake in Flipkart. Rainey stated, “For this reason, I encourage you to consider Q2 and Q3 performance together to assess the underlying growth of the business.” Walmart still raised its FY27 outlook to net sales growth of 4% to 5% in constant currency and adjusted EPS of $2.80 to $2.87, though analysts had modeled $2.90.
Furthermore, Walmart flagged that tariff refunds contributing to a gross profit rate of 25.4%, up 96 basis points, would be reinvested into customer pricing in the back half, pressuring operating income growth in Q3. Global inventory ran 6.7% higher, and general merchandise like-for-like inflation was just 1.7%.
Where the Names Diverge
Year to date through Wednesday’s close, Target stock was up 67%, Costco stock was up 11%, XRT was up 5%, and Walmart stock was up 3%. Target’s recovery trade has already priced in, so a soft quarter from Walmart reads differently for TGT than a shared category problem would.
Costco’s membership model, with 148.5 million cardholders and an 89.7% worldwide renewal rate, generates fee income that doesn’t swing on a single quarter of comparable sales at any one peer. That’s the mechanical reason COST stock is easing rather than breaking, and the retail ETF’s small decline confirms the tape is treating today as a Walmart-specific event.
Position Sizing and the Next Catalyst
Walmart carries a market cap of $909.61 billion and a P/E ratio of 42x while U.S. comparable sales grow at 2.6%. That valuation leaves little room for guidance disappointments, and any add-on-weakness position sizing on WMT stock should stay modest because Q3 headline growth is set to slow visibly before Q4 recaptures the Flipkart timing benefit.
The bull case rests on Walmart’s higher-margin engines, with global advertising up 38%, membership fees up 17%, and U.S. marketplace sales up 52% in Q2. A bear read is that a low-40s multiple is priced for those businesses to keep compounding while core comps decelerate.
Traders may want to watch whether Walmart stock holds above $105 through the close. Another catalyst arrives with the Q3 report, when the Flipkart calendar shift will reverse and clarify the underlying trend Rainey pointed to.
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