Retail giant Walmart (NASDAQ: WMT) saw its stock fall 12% in May, even after the company posted a strong quarterly earnings report.
The decline came as Walmart simultaneously delivered solid financial results and warned that consumers, particularly lower-income shoppers, are beginning to feel increasing economic stress.
Walmart reported a 7.3% year-over-year revenue increase for the fiscal 2027 first quarter, which ended April 30, along with a 4.1% rise in U.S. comparable sales.
Operating income climbed 5% over the same period last year, while earnings per share improved from $0.61 to $0.66, reflecting continued profitability across the business.
E-commerce remained a standout performer, with sales up 26% year over year, representing an acceleration in growth for the retail giant’s digital operations.
U.S. delivery volumes surged 45%, and 36% of store-fulfilled orders were delivered within three hours, with Walmart leaning heavily on its 5,200 U.S. store locations for fulfillment.
The company noted that a Walmart store sits within 10 miles of 90% of the U.S. population, giving it a significant logistical advantage over competitors in the e-commerce space.
Internationally, Walmart’s Flipkart business in India operates 800 micro-fulfillment centers capable of delivering orders in as little as 13 minutes, while 75% of orders in China were delivered within one hour.
CEO John Furner addressed the consumer outlook directly, stating, “When I look at the consumer, especially here in the US, they’re telling us, they’re feeling some pressure, and they’re looking to Walmart for value.”
CFO John Rainey pointed to rising oil prices as a specific pressure point, noting the average gallons of fuel customers filled their cars with dropped below 10 for the first time in four years.
Rainey warned that if elevated fuel prices persist, there is likely to be “upward pressure on average unit retail prices,” raising concerns about margin impacts in future quarters.
The market reacted sharply to these warnings, pushing Walmart from a market-beating performer earlier in the year to a significant underperformer by the end of May.
Other major retail stocks were also caught in the selloff, with Costco Wholesale (NASDAQ: COST) and Target (NYSE: TGT) both declining alongside Walmart during the same period.
Walmart holds Dividend King status, meaning it has raised its dividend for at least 50 consecutive years, a distinction that suggests the company is well-positioned to manage short-term headwinds.
Investors will likely need to wait for the next quarterly update to gain a clearer picture of how consumer pressure is affecting Walmart’s overall business performance.
