Greed would like a word… 

Walmart did the thing it always does… sell more groceries than the other low-grade dog food companies that identify as their competitors. U.S. same-store sales climbed 4.6%, Sam’s Club jumped nearly 6%, e-commerce surged 26%. They even raised their full-year sales outlook. That’s the part that should make shareholders smile. Instead, the stock got smoked 4% because EPS came in at $0.68 instead of $0.74. Six cents. Translation: Walmart just reminded us all that the market doesn’t reward execution… it punished imperfection.

(Source: Giphy) 

In short, the receipts of this earnings miss include margins that are getting chewed up by tariffs, legal charges, restructuring, and insurance costs. Management is playing whack-a-mole trying to hold prices down while costs creep higher every week. McMillon says they’ll keep prices “as low as we can for as long as we can.” Meaning, Walmart is trying to hold until the inventory bought before tariffs runs out, and then you’re paying more for your frying pan, your jeans, your kid’s car seat.

(Source: Yahoo Finance) 

The only saving grace though, is that 60% of U.S. sales come from groceries (mostly exempt), and Walmart sources two-thirds of goods domestically. That’s why they can take the hit better than most. Meaning, groceries are carrying the company, like always. 

As for the demographic, upper-income households are still shopping at Walmart. Not for fun though, but for survival. People who used to treat Walmart like a punchline are now lining up for rollbacks on ribeyes and allergy meds. More specifically, it’s higher earners realizing that $28 jars of almond butter with a moral lecture on the label isn’t a personality trait, it’s a friggin’ tax. Case in point: Target is flailing with another sales decline and a new CEO.

(Source: Giphy) 

Now when it comes to investors looking at these results, what do you do with this? Well, it depends on how much pain you can tolerate. In the near term, Walmart is bleeding margin as tariffs bite deeper… which, shocker, we’ll definitely see over the next coupl of quarters. However, long-term, Walmart is clearly winning the war. E-commerce is profitable. Advertising is scaling. Market share is moving up across income brackets. And unlike its rivals, Walmart has the scale to spread the pain around without breaking.

Now of course, the stock dropped because earnings missed by a few cents. But let’s all be adults here: if you want exposure to the American consumer… stressed, broke, trading down but still spending… Walmart is the cleanest window you’ll get. It’s not sexy, but hell, neither is feeding a family of four. And right now, that’s just how the cookies crumble. Meaning, keep your eyes on Walmart and if you’re a long-term thinking, this is about as close as “BTFD” you can get. (Not financial advice). Until next time, friends…

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.