Grocery comps turn negative at Albertsons, Publix, and Sprouts as pharmacy headwinds and lower-income consumer pressure offset resilient warehouse and mass channels.
ID sales averaged +1.6% with 7 of 10 retailers positive and 3 negative, a modest but uneven result. EBIT rose 30.6% on average with 4 up and 4 down, but that figure is distorted: Walmart alone accounts for 65% of the group change, and roughly half of reported EBIT growth reflects a one-off $1.54B customs tariff refund split between Target and Walmart. Stripping those refunds leaves EBIT up 15.9%, a better read on underlying performance—mass and warehouse retailers clustered together with gains while grocers skewed down. BJ's Wholesale confirmed receiving refunds but did not quantify them, so the ex-refund figure is conservative. Gross profit rose 9.4% (6 up, 2 down), again concentrated in Walmart at 70% of the group change; excluding Walmart the group was up 8.2%. Operating expense rose 5.6% with all 8 retailers reporting higher costs; Walmart accounted for 75% of the increase, leaving the rest up 4.0%. The EBIT improvement is gross-profit-driven—margin expansion outpacing expense growth—but the tariff refunds and Walmart concentration mean the headline number overstates broad improvement.
ID Sales Increases vs Decreases
The 7-3 positive-to-negative split masks deterioration beneath the surface. The three negative comps—Albertsons (-0.8%), Publix (-0.5%), Sprouts (-1.0%)—are all traditional or premium grocers that were solidly positive a year ago; Publix in particular fell from +3-6% range through mid-2025 to consecutive negative quarters. Sam's Club (+4.4%) and Target (+3.8%) posted the highest growth: Sam's held steady in the 4% range for three consecutive quarters, while Target's acceleration from negative territory represents the biggest positive trend shift in the group. Albertsons showed the sharpest deterioration, swinging from +2.4% in Q4 to -0.8%, a 320 basis point drop as lower-income pressure intensified. Sprouts improved sequentially from -1.7% to -1.0%, suggesting stabilization at a lower level. Weis (+2.3%) was the steadiest performer, matching prior quarters in the low-single-digit range.
Common Tailwinds
Widening price gaps versus traditional grocers benefited BJ's and Sam's Club, with BJ's noting 'traditional grocers raising prices has created a more favorable backdrop' and units growing 300 basis points faster than the market. Trade-down to private label and value packaging was cited by Albertsons and BJ's as supporting their value positioning. Membership growth provided structural support at Sam's Club and BJ's.
Common Headwinds
Medicare MFP/IRA pharmacy headwinds hit Albertsons, Weis, Publix, and Ahold Delhaize, with drug price reductions on 10 medications cutting pharmacy revenue. Lower-income consumer pressure was cited by Albertsons, Sam's Club, Sprouts, and Natural Grocers. Elevated fuel and utility costs appeared at Natural Grocers, Sprouts, Ahold Delhaize, Sam's Club, and Walmart. Sprouts also flagged cyclospora concerns impacting lettuce/salad sales in the final two weeks of the quarter.
Channel Performance
Warehouse clubs outperformed with Sam's Club at +4.4% and BJ's at +3.1%, benefiting from trade-down behavior and widening price gaps versus traditional grocers. Target's +3.8% marked a sharp turnaround after four quarters of declines, driven by merchandising resets. Hi-Lo grocers underperformed: Albertsons (-0.8%), Publix (-0.5%), and Ahold Delhaize (+0.8%) all decelerated meaningfully year-over-year, pressured by pharmacy headwinds and lower-income softness. Premium natural/organic struggled—Sprouts (-1.0%) and Natural Grocers (+1.2%) both far below their 2024 peaks as marginal health-conscious customers pulled back.
Macro & Competitive
Fuel prices above $4 per gallon emerged as a consistent pressure point. Sam's Club and Walmart both cited June trade-offs when fuel exceeded that threshold, with Walmart noting 'more than $2 billion of incremental fuel-related costs' above original guidance. Multiple executives described a 'softer consumer environment' than anticipated—Walmart called it 'softer than in February,' while Ahold Delhaize expects 'a softer sales environment' to persist through year-end. The K-shaped economy remains intact: BJ's noted 'the vast majority of growth continues to be driven by higher income members,' while Albertsons, Sam's Club, and Sprouts all cited specific weakness among lower-income consumers.
Traffic vs Ticket
Traffic is driving the positive comps while ticket remains under pressure from trade-down behavior. Target's turnaround was explicitly 'driven by sustained traffic growth.' BJ's highlighted 'traffic acceleration' alongside strong membership metrics. Sam's Club cited 'strong transaction growth.' Conversely, Albertsons and Ahold Delhaize noted unit softness as customers shift to private label and value packaging, compressing ticket even where traffic holds.
Guidance Themes
Cautious consensus prevails. Ahold Delhaize explicitly expects softness to 'persist for the rest of the year.' Walmart's revised fuel cost outlook ($2B+ above original guidance) signals margin pressure ahead. Natural Grocers described 'remaining thoughtful about the evolving consumer environment.' No retailer signaled acceleration; the tone was defensive, focused on value positioning and expense management rather than growth investment.
Hi-Lo
ACI · Hi-Lo · Qtr End: 2026-06-20
ID sales trend is deteriorating, falling from positive territory (+2.4% in Q4) to negative (-0.8%) as lower-income consumer pressure intensifies and pharmacy IRA headwinds accelerate.
ID Sales — Same-Store YoY
-0.8% Q2'26
EBIT
$264M Q2'26
Gross Profit
$6.64B Q2'26
Operating Expense
$6.37B Q2'26
Financials
2026Q2 vs year agoID sales-0.8%Gross profit-$100M−Operating expense+$86M=EBIT -$186M
Identical sales declined 0.8% in Q1 2026. Excluding the 100 basis point headwind from the Inflation Reduction Act and 50 basis points from egg deflation, identical sales increased approximately 0.7%. The decline was most pronounced in lower-income customer segments with softness in both units and baskets. Pharmacy scripts and digital (up 13%) drove the underlying growth. Full year guidance revised to -0.5% to -1.5%, or 0% to 1% excluding the 150 basis point pharmacy IRA headwind.
EBIT fell $186M YoY (-41.3%) to $264M because gross profit fell $100M while operating expense rose $86M. The gross profit decline had the larger impact on EBIT. Management attributed the gross margin rate decline of 23 basis points (excluding fuel and LIFO) to mix shift from outsized digital sales growth, with productivity benefits mostly offsetting investments in customer value. The SG&A rate increased 42 basis points primarily due to higher rent and occupancy costs, merger-related litigation, business transformation costs, and depreciation, partially offset by lower employee costs; in absolute dollars, adjusted SG&A was approximately flat.
Traffic vs Ticket
Traffic vs ticket breakdown was not explicitly provided. Management noted ongoing declines in industry units and pressure on lower-income customers affecting both units and baskets, with customers shifting to private label and value packaging.
Guidance
Fiscal 2026 identical sales guidance revised to -0.5% to -1.5% (or 0% to 1% excluding 150bp pharmacy IRA headwind). Adjusted EBITDA now expected at $3.55B-$3.625B. Adjusted EPS now expected at $1.75-$1.85 per share. Management expects Q2 similar to Q1 on year-over-year adjusted EBITDA basis, with modest improvement in Q3 and Q4.
Macro / Competitive
Management cited ongoing pressure on lower-income consumers, softness in grocery industry unit trends, and potential for additional affordability pressure from supplier cost increases. The West region is seeing more unit pressure than the middle and eastern parts of the country. Customers are trading down to private label, value packaging, and cheaper proteins.
Data vs Narrative
The data shows a clear deterioration from +2.4% last quarter to -0.8%, consistent with management's acknowledgment that 'results were below expectations.' However, management's emphasis on 'surgical investments' and ACI Edge restructuring frames this as a strategic reset rather than fundamental weakness, creating some tension with the stark trend reversal.
"Our response is to accelerate execution and surgically invest in our customer value proposition"
"The decline was most pronounced in our lower-income customer segments"
WMK · Hi-Lo · Qtr End: 2026-06-27
The ID sales trend is stable, with Q2's +2.3% comp matching Q4 2025's +2.5% and consistently landing in the low-single-digit range over the past several quarters.
ID Sales — Same-Store YoY
+2.3% Q2'26
EBIT
$29M Q2'26
Gross Profit
$328M Q2'26
Operating Expense
$299M Q2'26
Financials
2026Q2 vs year agoID sales+2.3%Gross profit+$20M−Operating expense+$23M=EBIT -$2.8M
Weis reported comparable store sales increased 2.3% in Q2 2026 on an individual year-over-year basis. Year-to-date comparable store sales increased 2.2% YoY and 3.6% on a two-year stacked basis. The company noted pharmacy revenue growth was unfavorably impacted by approximately $18.19 million from pricing headwinds related to the Inflation Reduction Act Medicare maximum fair price provisions effective January 1, 2026.
EBIT was $29M, down $2.8M YoY (-8.9%). EBIT fell because gross profit rose $20M (+6.5%) but operating expense rose more, $23M (+8.3%), so the expense increase outpaced the gross profit gain. The press release did not break out specific drivers for the gross profit or operating expense movements beyond noting the pharmacy pricing headwinds from the Inflation Reduction Act.
Traffic vs Ticket
No breakdown of traffic versus average ticket was provided in the release.
Guidance
No forward guidance on comps, sales, or revenue was provided.
Macro / Competitive
The company highlighted pricing headwinds from the Inflation Reduction Act Medicare maximum fair price provisions as a specific macro/regulatory factor impacting pharmacy revenue. The forward-looking statement mentioned risks from general economic conditions, tariffs and trade policies, competitive factors including increased competition with regional and national retailers, and price pressures.
Data vs Narrative
The narrative matches the data—the press release reports the same +2.3% Q2 comp shown in the ID sales data, and the consistent low-single-digit growth pattern is accurately reflected without any divergence.
ADRNY · Hi-Lo · Qtr End: 2026-06-30
The ID sales trend is deteriorating, slowing from +3.4% in Q2 2025 to +0.8% in Q2 2026, though management attributes much of the deceleration to specific headwinds (pharma, eggs, SNAP) rather than underlying weakness.
ID Sales — Same-Store YoY
+0.8% Q2'26
EBIT
$1.01B Q2'26
Gross Profit
$7.10B Q2'26
Operating Expense
$6.10B Q2'26
Financials
2026Q2 vs year agoID sales+0.8%Gross profit+$176M−Operating expense+$146M=EBIT +$30M
U.S. comparable sales excluding gas increased 0.8% in Q2. Executives noted this was negatively impacted by calendar shifts (-10bps), pharmacy sales from the Inflation Reduction Act (-70bps), egg price deflation (-50bps), and SNAP benefit reductions (-40bps), totaling 1.7 percentage points of headwinds. CFO stated 'underneath these factors, our competitive position remains strong' with market share gains across most U.S. brands.
EBIT was $1.01B, up $30M YoY (+3.1%). EBIT rose because gross profit increased $176M while operating expense increased $146M, with gross profit's gain outpacing the expense rise. Management attributed gross profit changes to favorable pharmacy mix partially offset by price investments. Operating expense increases were driven by higher utility costs and absorption of indirect costs from higher energy prices, though management noted they don't break out the full drivers of the derived operating expense figure.
Traffic vs Ticket
Traffic and ticket were not explicitly broken out. Executives noted overall U.S. volumes are competitive versus Nielsen's reported -2.6% industry decline, indicating positive relative volume performance.
Guidance
Full year guidance reiterated: underlying operating margin around 4%, free cash flow at least €2.3B, gross capex around €2.7B, diluted underlying EPS growth at mid to high single digit at constant rates. For SNAP impact, full year expected at 60-80 basis points.
Macro / Competitive
Management highlighted energy and utility costs affecting household budgets and operating expenses across the value chain. Consumer sentiment remains challenged with households being value-conscious and volumes subdued. Competition for every shopping trip remains high with retailers continuing to invest in price and promotions. CEO noted 'a softer sales environment' expected to persist for the rest of the year.
Data vs Narrative
The data shows a clear deceleration from +3.1% in Q1 to +0.8% in Q2 2026, which management acknowledges but frames as resilient given 1.7 percentage points of specific headwinds. Management's confidence in July strength and market share gains aligns with their narrative of underlying competitive strength despite softer reported comps.
"Between communication and reality, there's sometimes a gap what competitors tell us."
"We had a strong start in July in our results in the U.S."
PUB · Hi-Lo · Qtr End: 2026-06-27
The ID sales trend is deteriorating—after running +3-6% through mid-2025, comps have now turned negative for two consecutive quarters, signaling both pharmacy headwinds and weakening consumer demand are pressuring the business.
ID Sales — Same-Store YoY
-0.5% Q2'26
Financials
Comparable store sales for Q2 2026 decreased 0.5%. The company attributed the decline to two factors: (1) the Medicare maximum fair price (MFP) change effective January 1, 2026, which reduced drug prices for 10 drugs and lowered pharmacy sales, and (2) economic conditions impacting consumer spending. For the six months ended June 27, 2026, comparable store sales decreased 0.3%.
Traffic vs Ticket
No breakdown of traffic versus average ticket was provided.
Guidance
No forward guidance on comps, sales, or revenue was provided.
Macro / Competitive
The company highlighted 'economic conditions impacting consumer spending' as a drag on sales and comparable store performance. CEO Kevin Murphy referenced 'this difficult economic time' in his statement. The Medicare MFP change was also cited as a headwind, reducing pharmacy drug prices for 10 medications.
Data vs Narrative
The narrative matches the data. Management explicitly acknowledged negative comps and attributed the deceleration from +6.0% in Q2 2025 to -0.5% in Q2 2026 to Medicare drug pricing changes and consumer spending pressures. No attempt was made to spin the weakness.
"I'm grateful for our associates' commitment to our customers, our communities and each other, especially during this difficult economic time."
Premium
NGVC · Premium · Qtr End: 2026-06-30
The ID sales trend is stabilizing at a lower level after a significant deceleration from +8.9% peaks to +1.2%, though the sequential improvement from Q2's +0.5% suggests the company may be finding a floor.
ID Sales — Same-Store YoY
+1.2% Q2'26
EBIT
$15M Q2'26
Gross Profit
$98M Q2'26
Operating Expense
$83M Q2'26
Financials
2026Q2 vs year agoID sales+1.2%Gross profit-$0.3M−Operating expense+$0.3M=EBIT -$0.6M
Daily average comparable store sales increased 1.2% in Q3, comprised of a 3.1% increase in basket size and a 1.8% decrease in transaction count. Executives noted sequential improvement through the quarter and acceleration from 0.5% in Q2. Most differentiated categories (produce, dairy, meat) continued to lead sales growth. Natural Grocers Brand penetration increased 110 basis points YoY to 9.7% of total sales.
EBIT was $15M, down $0.6M YoY (-3.8%). EBIT fell because gross profit declined $0.3M while operating expense rose $0.3M. Management attributed the gross margin decline of 60 basis points to lower product margin from unfavorable sales mix, higher merchandise inventory shrink, and higher freight costs, with shrink also partially attributable to temporary operational impacts from an ERP system upgrade. Store expenses as a percentage of net sales decreased 20 basis points from expense management, though pre-opening expenses increased $1.3M (40 basis points) from accelerated new store openings.
Traffic vs Ticket
Yes. Basket size increased 3.1% while transaction count decreased 1.8%.
Guidance
FY2026 daily average comparable store sales growth narrowed to 1.5%-2% (from prior 1.5%-2.5%). Diluted EPS guidance narrowed to $2.07-$2.11 (from $2.07-$2.15). Six to seven new stores expected (down from six to eight). Q4 will have one fewer selling day due to Labor Day closure.
Macro / Competitive
Executives cited a challenging consumer environment with economic uncertainty and sustained focus on value among consumers, consistent with trends across the grocery retail sector. Marginal customers have pulled back due to gasoline prices and utility costs. The CFO noted they are 'remaining thoughtful about the evolving consumer environment.'
Data vs Narrative
The narrative matches the data. Management acknowledges the sharp comp deceleration and attributes it to economic pressures on marginal customers, which aligns with the drop from +8.9% to +1.2%. However, the emphasis on sequential improvement and {N}power strength provides a more optimistic spin than the broader deceleration trend warrants.
"Our most loyal customers have stayed extremely loyal... The people we've lost a little bit on are the marginal customers."
"We haven't really seen a lot of that downtrading at our stores."
SFM · Premium · Qtr End: 2026-06-28
The ID sales trend is stabilizing after steep deceleration, with comps improving from -1.7% in Q1 to -1.0% in Q2, and the company expects sequential improvement as easier comparisons begin; however, the macro remains a wildcard for traffic recovery.
ID Sales — Same-Store YoY
-1.0% Q2'26
EBIT
$174M Q2'26
Gross Profit
$901M Q2'26
Operating Expense
$726M Q2'26
Financials
2026Q2 vs year agoID sales-1.0%Gross profit+$75M−Operating expense+$81M=EBIT -$6.7M
Comparable store sales declined 1.0% in Q2 2026, compared to +10.2% in the prior year quarter. The company noted sequential comp improvement through May, with June being the lowest comp month as they lapped strong prior year produce performance and natural/organic supply chain disruption. July started slightly negative but within guidance range. E-commerce sales grew more than 12% and represented approximately 16% of total quarterly sales. Traffic and units in basket showed modest improvements sequentially.
EBIT was $174M, down $6.7M or 3.7% YoY. EBIT fell because operating expense rose $81M while gross profit rose only $75M, meaning expense growth outpaced gross profit growth. For gross margin, the company cited loyalty investment and elevated fuel costs as headwinds, partially offset by self-distribution benefits and vendor participation. SG&A increased $38M with 30 basis points of deleverage, driven by fixed cost deleverage from lower comparable store sales and business investments, partially offset by disciplined cost management and lower incentive compensation.
Traffic vs Ticket
Yes, they broke out components. Traffic moderated and was the primary driver of comp pressure. Units per basket were also down as customers managed their baskets, particularly in produce. Sequential improvement in both traffic and units was noted through the quarter.
Guidance
Q3 2026 comp sales expected between -0.5% to +1.5%, with EPS of $1.20-$1.24. Full year 2026 (52-week basis): total sales growth 5.5%-6.5%, comp sales -0.5% to +0.5%, EBIT $675M-$685M, EPS $5.32-$5.40. Q3 EBIT margin pressure expected to be approximately 50 basis points due to fixed cost deleverage and more new store openings.
Macro / Competitive
Management highlighted a challenging consumer environment with customers making thoughtful choices around healthy grocery spend. Elevated fuel costs and grocery price inflation are pressuring consumers. The lower-engaged, lower-income customer has been harder to move. Cyclospora concerns in the last two weeks impacted lettuce/salad-related sales. Management noted grocery units across the industry are not as strong due to inflation.
Data vs Narrative
The narrative aligns with the data. Management acknowledged the difficult lapping of +10.2% prior year comps and emphasized that the toughest comparisons are now behind them. The data shows a clear deceleration from double-digit positive comps in early 2025 to negative territory in 2026, which management attributed to lapping unique events (supply chain disruption, strong produce) and a pressured consumer.
"Things that worked last year aren't working as well this year."
"Our most difficult prior year comparisons are behind us and become more manageable as the year progresses."
Warehouse
BJs Wholesale
BJ · Warehouse · Qtr End: 2026-05-02
The ID sales trend is stable to slightly decelerating; Q2's 3.1% comp improved sequentially from Q1's 1.5% but remains below the 3.8%-4.0% levels seen a year ago, though traffic acceleration and strong membership metrics suggest underlying health.
ID Sales — Same-Store YoY
+3.1% Q2'26
EBIT
$252M Q2'26
Gross Profit
$1.11B Q2'26
Operating Expense
$858M Q2'26
Financials
2026Q2 vs year agoID sales+3.1%Gross profit+$104M−Operating expense+$71M=EBIT +$33M
Merchandise comparable sales increased 3.1% in Q2 2026, driven by a balance of traffic and ticket. On a two-year stacked basis, merchandise comps were 5.4%, in line with Q1. Perishables grocery and sundries comped up 2.8%, led by grocery with strength in beverages and active nutrition. General merchandise and services sustained comp growth of 5.3%, driven by consumer electronics and home. Inflation was just under a point in the quarter.
EBIT was $252M, up $33M YoY (+14.8%). EBIT rose because gross profit increased $104M while operating expense increased $71M, with gross profit growth outpacing expense growth. Management attributed the gross profit increase to merchandise margin rate declining approximately 20 basis points YoY, reflecting investments in value for members, partially offset by fuel profit exceeding plan due to strong execution and favorable market conditions. Operating expense growth was driven by costs from opening new clubs and gas stations, including labor, occupancy, and depreciation, partially offset by an $11M gain from a sale-leaseback transaction on the Ohio distribution center.
Traffic vs Ticket
Yes, the comp was driven by a healthy balance of traffic and ticket. About half of the 3.1% comp was driven by traffic, which was a significant acceleration from Q1. This marks the 18th consecutive quarter of traffic growth.
Guidance
Maintaining full-year guidance of 2%-3% comparable club sales growth, excluding gasoline. Raised adjusted EPS guidance to $4.60-$4.80 for the full year, up from prior guidance, reflecting strong Q2 results particularly in the gas business. MFI growth expected to moderate from ~10% to 6% by year-end as fee increase impact normalizes.
Macro / Competitive
The K-shaped economy persists, though some sequential improvement was seen. The vast majority of growth continues to be driven by higher income members. Traditional grocers raising prices has created a more favorable backdrop for BJ's value proposition. Price gaps continue to improve. Units grew more than 300 basis points faster than the market in the quarter.
Data vs Narrative
The narrative aligns with the data. Management characterized Q2 as a strong quarter with comp momentum, which matches the sequential improvement from 1.5% in Q1 to 3.1% in Q2. The two-year stack of 5.4% being 'in line with' Q1 is accurate (Q1 two-year stack was 4.1% + 1.5% = 5.6%, very close). The narrative appropriately acknowledges comps are lower than year-ago levels while emphasizing traffic and membership strength.
"We earned more in this single quarter than we did in the entire year we went public back in 2018."
"Our members know that we offer great value. Strong volume growth, combined with favorable pullback from peak gas prices, drove fuel profit dollars ahead of plan."
WMT · Warehouse · Qtr End: 2026-04-30
The ID sales trend is showing signs of stabilization after moderating from 7.0% in 2024Q3 to 3.8% in 2025Q3, with the past three quarters holding steady in the 3.9%-4.4% range, supported by strong transaction growth and membership gains.
ID Sales — Same-Store YoY
+4.4% Q2'26
Financials
Sam's Club U.S. delivered comps of 4.4% in Q2, driven by a 7% increase in transactions with solid growth in unit volumes. E-commerce grew 26% with delivery from club up triple digits following the launch of one-hour delivery in April. Membership income grew nearly 6%, driven by steady growth in member counts and plus penetration.
Traffic vs Ticket
Yes, Sam's Club U.S. comps were driven by a 7% increase in transactions with solid growth in unit volumes, indicating traffic-led growth rather than ticket-driven.
Guidance
Full-year enterprise sales guidance raised to 4%-5% growth (from 3.5%-4.5% previously). Full-year operating income guidance raised to 7%-8.5% growth (from 6%-8% previously). Full-year EPS guidance raised to $2.80-$2.87 (from $2.75-$2.85). Q3 sales growth expected between 3%-3.75%. Q3 operating income growth expected 2%-4% on constant currency basis. Sam's Club U.S. and International expected to be growth accretive to enterprise in both Q3 and Q4.
Macro / Competitive
Executives noted customers are feeling pressure from higher fuel costs, with June showing more obvious trade-offs when fuel exceeded $4 per gallon. The company now expects more than $2 billion of incremental fuel-related costs this year above original guidance. Management characterized the consumer environment as 'arguably softer' than in February when initial outlook was introduced, with lower-income consumers facing accumulated pressures.
Data vs Narrative
The narrative aligns with the data. Management acknowledged the moderation in comps from prior year levels while emphasizing the strength of transaction-driven growth and membership metrics. The 4.4% comp in 2026Q2 represents a modest sequential acceleration from 3.9% in 2026Q1, consistent with management's commentary about price investments driving sustained share gains.
"Customers who use Sparky for shopping spend 40% more per order than others who do not."
"Our members spend approximately four times more than non-members."
Discretionary Mass
TGT · Discretionary Mass · Qtr End: 2026-05-02
The ID sales trend is clearly improving, with +3.8% comp in Q2 representing a significant acceleration from the prior four quarters of declines, driven by sustained traffic growth as merchandising resets gain traction.
ID Sales — Same-Store YoY
+3.8% Q2'26
EBIT
$2.56B Q2'26
Gross Profit
$8.94B Q2'26
Operating Expense
$6.38B Q2'26
Financials
2026Q2 vs year agoID sales+3.8%Gross profit+$1.63B−Operating expense+$385M=EBIT +$1.24B
Comparable sales increased 3.8% in Q2, driven by a 3.6% increase in traffic with average ticket about flat. Store comparable sales grew 2.7%, while digital comparable sales increased 8.7%, led by growth of more than 25% in same-day delivery. On a two-year basis, Q2 net sales CAGR was 2.1%, 30 basis points higher than Q1. Executives highlighted particular strength in Fun 101, food and beverage, and beauty categories.
EBIT was $2.56B, up $1.24B or +94.4% YoY on a reported basis; however, $994M of this came from a tariff refund, so underlying EBIT was $1.61B, +17.5% YoY. EBIT rose because gross profit increased $1.63B (+22.3%) while operating expense rose $385M (+6.4%), with gross profit's contribution far exceeding the expense headwind. Management attributed the gross margin improvement to 3.7 percentage points of benefit from IEPA tariff refunds, lapping last year's elevated markdown and purchase order cancellation costs, and continued growth in higher-margin revenue streams like Roundel and Target Plus, though this was partially offset by continued intentional investments in value. On SG&A, management stated the 7% increase reflected higher compensation costs including investments in additional hours and training for field teams, higher incentive compensation, and planned spending related to capital projects.
Traffic vs Ticket
Yes, traffic increased 3.6% while average ticket was about flat.
Guidance
Full-year net sales growth raised to around 5% (up 1 percentage point from prior outlook). Full-year operating margin rate, excluding tariff refunds, expected to be around 0.5 percentage point higher than last year's adjusted 4.6%. EPS guidance raised from $7.50-$8.50 to $9.90-$10.90, which includes $1.65 of tariff refund benefit; excluding refunds, the midpoint increased $0.75.
Macro / Competitive
No specific macro commentary on inflation, consumer health, or competition was provided in the transcript. Management focused on internal execution and strategic investments rather than external economic factors.
Data vs Narrative
The narrative matches the data well. Management's emphasis on merchandising authority and guest-resonating changes aligns with the sharp improvement from -2.5% in Q4 2025 to +5.6% in Q1 2026 and +3.8% in Q2 2026, with executives explicitly citing proof points in categories where investments were made.
"Traffic is at the top of that list... guests are responding to the change we are making."
"We've lowered prices on more than 10,000 items over the last 12 months."
Essentials Mass
WMT · Essentials Mass · Qtr End: 2026-04-30
The ID sales trend is deteriorating, with comps decelerating from +4.1% in Q1 to +2.6% in Q2, though management contends core categories remain stable at 3%-4% once pharmacy headwinds are excluded.
ID Sales — Same-Store YoY
+2.6% Q2'26
EBIT
$9.38B Q2'26
Gross Profit
$49.13B Q2'26
Operating Expense
$39.75B Q2'26
Financials
2026Q2 vs year agoID sales+2.6%Gross profit+$4.50B−Operating expense+$2.40B=EBIT +$2.10B
Walmart U.S. comparable sales ex-fuel were +2.6% in Q2, led by transactions. Management noted this was negatively impacted by 125 basis points from Maximum Fair Price regulation in health and wellness. Excluding health and wellness, core merchandise comps have been consistently in the 3%-4% range. The CFO stated this was 'the best second quarter we've had in the last three years' when adjusting for the pharmacy headwind.
EBIT was $9.38B, up $2.10B YoY (+28.8%), but $546M of this was a tariff refund; underlying EBIT excluding the refund was $8.84B, +21.3% YoY. EBIT rose because gross profit increased $4.50B while operating expense rose $2.40B, with gross profit contributing more to the gain. The CFO attributed profit growth to strong high-margin commerce solutions including advertising up 38% and membership income up 17%, while noting wage leverage from productivity improvements was more than offset by higher depreciation and self-insurance costs.
Traffic vs Ticket
Transactions and units grew in the quarter, with management emphasizing transaction-led growth. Sam's Club U.S. comps were driven by a 7% increase in transactions with solid unit volume growth. Specific ticket figures were not broken out.
Guidance
Full-year sales guidance raised to 4%-5% from 3.5%-4.5%. Full-year operating income guidance raised to 7%-8.5% from 6%-8%. Q3 sales growth expected at 3%-3.75%, with Q3 operating income growth of 2%-4% as price investments from Q2 have full-quarter impact. Full-year EPS guidance raised to $2.80-$2.87 from $2.75-$2.85.
Macro / Competitive
Customers are feeling pressure, particularly when gas prices exceeded $4 per gallon. June showed customers making trade-offs. Higher-income households continue to drive share gains. Fuel prices are creating a $2B+ incremental cost headwind versus original guidance. Management described a 'softer consumer environment than in February.'
Data vs Narrative
The narrative aligns with the data but provides important context. The sequential deceleration from 4.1% to 2.6% is real, but management's explanation that 125bp came from Maximum Fair Price regulation and that core categories remain at 3%-4% is supported by supplemental disclosures provided. The heavy emphasis on share gains and price investment suggests management is proactively addressing softer trends.
"We grew operating income 10%, ex tariffs. That is 4x the level of revenue growth."
"Our members spend approximately four times more than non-members."
