Walmart's GAAP earnings per share fell 9% in fiscal Q2 while its adjusted number rose 19%. Almost the entire divergence sits in last year's comparison base, not in this year's quarter.

by Henry Nakamura · August 21, 2026

Earnings Reporter, Earnings Dispatch

Walmart's fiscal second quarter, reported before the opening bell on Thursday, August 20, is a clean example of why the direction of a company's earnings growth can depend entirely on which line you read. On a GAAP basis, diluted earnings per share fell to $0.80 from $0.88 in the year-ago quarter, a decline of about 9%. On the company's adjusted basis, EPS rose to $0.81 from $0.68, a gain of about 19%. Both pairs of numbers come from the same reconciliation table in Walmart's own earnings release for the three months ended July 31, 2026.

The reason the two measures point in opposite directions has almost nothing to do with the quarter just reported. Walmart's release shows only two adjustments to the current period: $0.12 per share of net unrealized and realized investment losses added back, and $0.11 per share of benefit from a certain tax matter taken out. Those very nearly cancel, leaving a net adjustment of a single cent — $0.80 plus $0.01 equals the $0.81 adjusted figure. The year-ago quarter was a different animal. There, Walmart backed out $0.26 per share of investment gains and added back $0.05 for certain legal matters and $0.01 for business reorganization charges, a net reduction of $0.20 that took a GAAP $0.88 down to an adjusted $0.68.

In other words, the 19% adjusted growth rate is measured against a base cut by a fifth of a dollar, while the GAAP decline is measured against a base inflated by investment gains Walmart does not treat as operational. Neither presentation is wrong. But a reader who sees only the adjusted figure would not know the improvement is largely an artifact of what happened to Walmart's equity investment portfolio in the summer of 2025.

The same effect runs through the operating line, and there the gap is wider. Walmart reported GAAP operating income of $9.383 billion, up 28.8% as reported, with no adjustments at all in the current quarter — so adjusted operating income equals the GAAP figure. The year-ago quarter's GAAP operating income of $7.286 billion, however, was adjusted upward by $440 million for certain legal matters and $150 million for business reorganization charges, producing an adjusted base of $7.876 billion. Against that base the release prints adjusted operating income growth of 19.1% as reported and 17.4% in constant currency; the 28.8% GAAP headline, the 19.1% and the 17.4% are all Walmart's own figures, not this desk's arithmetic. The roughly eleven-point spread between the 28.8% GAAP headline and the constant-currency adjusted rate is prior-year charges plus foreign exchange, not incremental profit earned this quarter.

The operational story underneath is more mixed than either growth rate suggests. Walmart U.S. comparable sales excluding fuel rose 2.6%, against a consensus of 3.8% compiled by LSEG, according to Reuters — a deceleration from 4.6% in the same quarter a year earlier and 4.1% in the first quarter of this fiscal year. Walmart's earnings presentation splits the 2.6% into transactions up 1.5% and average ticket up 1.1%, and attributes roughly 125 basis points of headwind to pharmacy, tied to maximum fair price regulation. Walmart U.S. segment net sales grew 3.5% while segment operating income grew 20.6%.

Sam's Club U.S. was the stronger domestic performer: comparable sales excluding fuel up 4.4%, net sales up 8.8%, operating income up 44.3% on a GAAP basis, but up 23.3% on the company's adjusted basis — the same prior-year base effect at work. Walmart International net sales rose 12.8% as reported but 7.9% in constant currency, with operating income up 16.6% reported and 5.7% in constant currency. Consolidated total revenue was $187.937 billion, up 5.9% and 5.1% in constant currency; global eCommerce rose 23% to 24% of net sales and global membership fee revenue rose 17%.

Consolidated gross profit rate reached 25.4%, an improvement the release puts at 96 basis points, while consolidated operating expenses as a percentage of net sales rose 20 basis points to 21.4% — deleverage, not leverage. Much of the gross margin gain traces to tariff refunds: Walmart said it received substantially all of the $2.9 billion it was eligible for, according to CBS News, which also reported 11,000 rollbacks in the quarter versus 7,200 in the first. The effective tax rate was 18.5%, down from 23.3%, a 4.8-point move that is itself largely the tax matter Walmart adjusts out of its non-GAAP number: on an adjusted basis the release shows the rate rising, to 24.8% from 24.3%.

Walmart raised its full-year fiscal 2027 outlook: net sales growth in constant currency to 4.0%–5.0% from 3.5%–4.5%, adjusted operating income growth in constant currency to 7.0%–8.5% from 6.0%–8.0%, and adjusted EPS to $2.80–$2.87 from $2.75–$2.85.

That EPS raise is smaller than it looks against the quarter that produced it. Walmart had guided second-quarter adjusted EPS to $0.72 to $0.74 and delivered $0.81, roughly eight cents above its own midpoint. The full-year range moved up five cents at the bottom and two at the top. Arithmetically, the second half is now expected to contribute less than it was three months ago.

Walmart guides to a full year and to the third quarter; it does not publish a half-year or fourth-quarter EPS forecast. The figures that follow are this desk's arithmetic on the company's own stated numbers, not company guidance. Adjusted EPS of $0.66 in the first quarter plus $0.81 in the second gives $1.47 for the first half. Subtracting that from the new full-year range of $2.80 to $2.87 leaves $1.33 to $1.40 for the back half. The comparable figure for last year's second half is $1.35 — fiscal 2026 full-year adjusted EPS of $2.64 less first-half adjusted EPS of $1.29. So the guidance implies second-half adjusted EPS somewhere between roughly 1.5% below and 4% above the prior year, after a first half that grew about 14%.

Chief Financial Officer John David Rainey addressed the shape of that directly in the release. "Our business model is only getting stronger and more durable, and we're pleased to raise our guidance for the year. For Q3 sales guidance, we expect a headwind of over 100bps to growth related to a timing shift of Flipkart's Big Billion Days between Q3 and Q4. Our operating income outlook reflects the continued prioritization of tariff refunds received in Q2 into customer experience and price investments in the second half. For this reason, I encourage you to consider Q2 and Q3 performance together to assess the underlying growth of the business," he said. Third-quarter guidance is for net sales growth of 3.0% to 3.75% in constant currency, operating income growth of 2.0% to 4.0% in constant currency, and adjusted EPS of $0.62 to $0.64.

Taking the third-quarter guide out of that implied second half — again a subtraction performed here, not a Walmart forecast — leaves a fourth-quarter residual of roughly $0.69 to $0.78, or $0.71 to $0.76 pairing the matching ends of each range. Walmart's fiscal 2026 fourth quarter produced adjusted EPS of $0.74. On its own numbers, then, the company is guiding to a holiday quarter that could be flat, modestly higher or modestly lower than the year before — a wide band that a headline reading only "guidance raise" does not convey. Chief Executive John Furner, for his part, framed the quarter around digital, saying in the release that Walmart's multi-year growth in eCommerce is evidence customers are choosing the retailer for price, speed and convenience across a broad assortment.

The market read the comparable sales line rather than the guidance raise. Walmart shares closed Thursday at $103.84, down $10.46, or 9.15%, on volume of 83.6 million shares, according to The Motley Fool's market wrap for August 20; Reuters reported the stock down about 8% in early Thursday trading. The broader tape fell with it: the S&P 500 closed at 7,641.16, down 66.82 points; the Dow Jones Industrial Average at 52,759.21, down 703.84 points; and the Nasdaq composite at 26,067.17, down 263.92 points, according to the Associated Press levels wire. Measured against Wednesday's closes, those declines work out to 0.87%, 1.32% and 1.00% respectively. Friday's session was still under way at the time of writing, so no Friday closing reaction exists yet.