Walmart just dropped its Q2 2025 results, and honestly, the headlines are a bit of a mess. If you just look at the stock price dipping a few percentage points after the announcement, you’d think the sky was falling in Bentonville. But it isn't. Not even close.
Basically, the "big news" was a rare miss on earnings per share. For the first time in nearly three years, Walmart didn't beat the analyst consensus for profit. That usually sends investors running for the hills, especially when a stock is trading near its all-time highs like Walmart was heading into August.
The Real Story Behind the Walmart Q2 Earnings 2025 Miss
Revenue actually smashed expectations. We’re talking $177.4 billion for the quarter. That’s up 4.8% (or 5.6% if you strip out the currency fluctuations). So people are still buying—they're just buying differently.
The profit "miss" wasn't because people stopped shopping. It was largely due to a massive, one-time headache: legal and insurance costs. Specifically, the company got hit with roughly $700 million in expenses related to general liability and workers' compensation claims.
"Our core business is strong and growing," CFO John David Rainey said during the call. He wasn't just being corporate; the numbers back him up if you look past the legal fees.
When you strip out those weird, one-off costs, the "adjusted" operating income actually grew slightly. But Wall Street is a "what have you done for me lately" kind of place, and that 8% negative surprise on EPS to $0.68 (versus the $0.74 forecast) was all the excuse traders needed to sell off.
Why the "Who Knew?" Campaign is Working
If you’ve seen those "Who Knew?" ads lately, you know Walmart is trying to convince high-income shoppers that they aren't just for cheap toilet paper. And it’s working.
E-commerce is the absolute engine right now. Global digital sales surged 25% this quarter. In the U.S. alone, e-commerce was up 26%. What's wild is that nearly half of the total U.S. comparable sales growth came from online orders.
- Delivery Speed: About one-third of store-delivered orders are now arriving in under three hours.
- The 30-Minute Club: Roughly 20% of those deliveries are hitting doorsteps in 30 minutes or less.
- Store Traffic: Despite the digital boom, physical foot traffic stayed steady, hovering between +0.8% and -1.6% throughout the summer.
This is what experts like R.J. Hottovy from Placer.ai call "omnichannel success." Walmart is managing to grow its online empire without cannibalizing its 10,000+ stores. People are using the stores as mini-warehouses for their express deliveries. It’s a smart play that Amazon simply can’t replicate at this scale.
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The Hidden Profit Drivers: Ads and Memberships
Retail is a low-margin business. You sell a box of cereal for $4, and you might make pennies. But selling an ad on the website? That’s almost pure profit.
Walmart Connect—their U.S. advertising arm—grew 31% this quarter. If you include the recent Vizio acquisition and international ads, that number jumps to a staggering 46%.
Then you’ve got membership income. Between Walmart+ and Sam’s Club, membership revenue was up 15%. This is the "sticky" money. Once you pay for the membership, you’re way more likely to keep shopping there to get your "money’s worth."
The Elephant in the Room: Tariffs
We have to talk about the cost of goods. CEO Doug McMillon didn't sugarcoat it. He mentioned that as they replenish inventory at post-tariff price levels, costs are creeping up every single week.
How are they handling it?
They’re leaning into "rollbacks." Walmart actually increased its number of price rollbacks to about 7,400 this quarter. That’s 2,000 more than last quarter. In grocery, rollbacks are up 30% compared to last year.
They are essentially trying to eat some of the cost increases to keep the "low price" crown. It’s a risky game of chicken with their own margins, but they’re betting that gaining market share now will pay off later when competitors are forced to hike prices even higher.
What it Means for Your Wallet
Honestly, if you're a middle-to-lower-income shopper, you’ve probably already noticed you're buying fewer "wants" and more "needs." Walmart’s data shows exactly that. People are switching to smaller pack sizes or opting for private labels (like Great Value) to make ends meet.
Key Takeaways for Investors and Shoppers:
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- Guidance is Up: Even with the EPS miss, Walmart raised its full-year sales guidance to 3.75%–4.75%. They aren't worried about a recession; they think they’ll win in one.
- Inventory is Lean: U.S. inventory only rose 2.2%, which means they aren't sitting on a mountain of unsold stuff. This is huge for avoiding massive clearance sales that kill profits.
- The "Vizio Effect": Integrating Vizio into the ad business is just starting. Expect to see more "shoppable" content on your smart TVs soon.
Strategy Moving Forward
If you're looking at Walmart as a bellwether for the economy, the message is "cautious but resilient." They are seeing shoppers from all income levels—even households making over $100k—flocking to their stores to save money on groceries.
For the rest of 2025, expect Walmart to get even more aggressive with delivery speeds. They’ve proven that people will pay for the convenience of a 30-minute delivery, and they have the store footprint to do it. The stock might have taken a breather after the report, but the underlying machine is humming.
Practical Next Steps:
- Track the Rollbacks: If you're a consumer, the 30% increase in grocery rollbacks means now is the time to stock up on staples.
- Watch the P/E Ratio: For investors, the post-earnings dip brought the valuation down slightly, but it’s still trading at a premium compared to peers like Target.
- Monitor Delivery Promos: Walmart is likely to double down on Walmart+ perks heading into the holiday season to keep that 25% e-commerce growth alive.