WMT is surging to new heights today. See what the experts say here.
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Operator
Greetings. Welcome to Walmart’s third quarter fiscal year 2026 earnings call. At this time, all participants are in listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Please note this conference is being recorded. I’ll now turn the conference over to Steph Wissing, Senior Vice President, Investor Relations. Thank you, Steph. You may begin.
Steph Wissing (Senior Vice President, Investor Relations)
Welcome everyone. Thank you for your interest in Walmart. Joining me today from our home office in Bentonville are Walmart CEO Doug McMillan and CFO John David Rainey. Doug will begin with remarks about our upcoming leadership transition. Then we will hear from John Furner, recently named as CEO of Walmart Inc. Beginning February 1, 2026. Doug and John David will then share their views on the third quarter and our business trends thereafter. We’ll open the line for your questions during the question and answer portion. We’ll invite segment leaders to join in responding to your John for Walmart U.S. Kath McLay for Walmart International and Chris Nicholas for Sam’s Club us. We will make every effort to answer as many questions as we can in the hour we have scheduled for this call. As a courtesy to others, please limit yourself to one question. For additional detail on our results, including highlights by segment, please see our earnings release and supplemental presentation on our website. Today’s call is being recorded and management may make forward looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the sec. Please review our press release and slide presentation for a cautionary statement regarding forward looking statements as well as our entire safe harbor statement and non GAAP reconciliations on our that concludes my introduction. Doug, it’s my privilege to turn the earnings call over to you one last time.
Doug McMillan (Chief Executive Officer)
Good morning and thanks for joining us. The team delivered another strong quarter. Our associates have us well positioned to finish the year with momentum. It’s been an honor to serve them as CEO and I’m as excited about the future of this company as I’ve ever been. John’s ready. He knows our business so well and he has the characteristics to lead us into the future. I couldn’t be happier for him and for our company. Congratulations, John.
John Furner (Chief Executive Officer of Walmart Inc.)
Thank you, Doug. I’m excited about our future. I’m appreciative and humbled by this opportunity and look forward to accepting the responsibility to serve Walmart more broadly as President and CEO. I love this company and I love our associates. I believe in our values and in our purpose to help people save money and live better. I believe we’re well positioned to fulfill our purpose.
Doug McMillan (Chief Executive Officer)
You’ll be great. Back to the quarter. The team delivered strong sales and profit growth across each of our segments. Sales grew 5.9% overall in constant currency and adjusted operating income grew even faster at 8%. We drove positive transaction counts and unit volumes and we’re gaining market share in grocery and general merchandise, including here in the US where we saw strength across income cohorts and especially with higher income households. It’s great to see the positive general merchandise sales across the company and I’m excited about what we’re seeing with our fashion categories In Walmart US in particular, e-commerce was a highlight again in Q3, up 27% in total, each segment delivered growth in e commerce above 20%. The way we’re driving growth on the top line is helping us strengthen and differentiate our bottom line. Globally, advertising grew 53% including Vizio and membership income was up 17%. Let’s talk about each segment. I’ll start with International, which continues to lift the growth rate for the company. International drove the strongest performance with a sales increase of 11.4% in constant currency and adjusted operating income grew 16.9%. We continue to benefit from business mix changes and lower losses in E Commerce. Transaction counts and unit volumes are up across markets and we’re gaining market share. E Commerce sales for International were up 26%. That included our Flipkart team in India executing a record big billion days event. Almost a third of our business outside the US is digital, with e commerce in China at 50% penetration and the team in China is delivering orders fast. Nearly 80% of digital orders arrive in under an hour. In October, I got to visit three Chinese cities. In Hefei, a city of about 10 million people, we we visited a relatively new Sam’s Club that was outstanding. We now have 60 Sam’s clubs in the country and a healthy pipeline of new clubs coming. China is more advanced in terms of digital retail than anywhere we operate, and there’s always a lot to learn that helps inform what we do around the world. I also got a chance to visit our team in Canada last month. I’m excited about the leadership team and the opportunity we have to grow market share reinforced by EDLP and tapping into our omnichannel advantages. For Walmart US, we drove comp sales of 4.5% and we grew e commerce by 28% with marketplace sales growth of 17%. We continued to deliver the value people are looking for with healthy growth in both transactions and units sold. Comps were good across each month of the quarter and share gains were consistent with what we’ve seen this year. Delivery speed matters and we’re delivering faster than ever. For Q3, 35% of digital orders were delivered in under three hours. At a category level, sales and g
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Doug McMillon (Chief Executive Officer)
General merchandise were positive with fashion, home and automotive leading the way. Grocery performed well with good unit growth and health and wellness was up low double digits for Sam’s Club. Here in the US the team delivered comp sales of 3.8% with strength across categories. The comp was driven by transaction counts and we’re gaining market share in grocery and general merchandise. Sam’s continues to do a great job of engaging our members digitally. We have a profitable E Commerce business that outpaced our expectations again this quarter, up 22% in sales for Sam’s membership. We see good growth in member counts, renewal rates and plus member penetration. As we look at our customers and members here in the US they’re still spending with upper and middle income households driving our growth. We continue to benefit from higher income families choosing to shop with us more often. Middle income households have been steady and while lower income families have been under additional pressure of late, we’re encouraged by how our teams are meeting them with greater value across necessities and doing what we can to help them stretch their dollars further. For the quarter. Like for like, inflation in Walmart US was 1.3% with food and general merchandise up low single digits. We continue working to resist the upward pressure on our cost of goods and to manage our mix. We have about 7,400 active rollbacks in Walmart US right now, with more than half of those in the grocery category. Often our 90 day rollbacks lead to a permanent price reduction. A new EDLP. Since the beginning of the year, more than 2000 rollbacks have become the new everyday price. We’ll keep strengthening our ability to save people time and money and we’ll keep finding ways to keep our prices as low as possible and being strategic in our pricing actions. Everyone wants value. Inventory management is always important and it’s especially important in this environment as we reduce markdown risks to help fund stronger price gaps. Our team continues to do a great job. The ability of our Walmart US team in particular to make good quantity decisions and manage pricing and mix well has been impressive. Both Walmart and Sam’s US delivered strong seasonal sell throughs for back to school and Halloween. The results we’re delivering today are powered by our people and by technology. We continue to get better at putting our data to work, building more capable tech products and platforms and by deploying physical automation. The investments to automate our supply chain continue to go well. The team is delivering according to plan and it’s helping our associates in our stores receive and manage inventory better than before. As it relates to AI, we continue building towards an e commerce experience that is 1 more personalized and relevant, 2 multimodal meaning a voice, text, image and video experience that is more conversational. Interacting with our app will include improved imagery, short form video, live streaming and interaction with influencers. Ads will still be present but in a more contextual and helpful way, surfacing as recommendations or sponsored bundles that add value. There’ll be attention, capture and decision influence through data and 3 the new experience will be contextual, understanding customer intent and anticipating needs to save them time as we think about new tech products and capabilities. Sometimes we build our own tech and sometimes we partner. Our recent announcement with OpenAI is an example. This new partnership will allow customers and members to purchase items from Walmart and Sam’s club directly through ChatGPT. This starts relatively simplistically with the checkout process, but it’ll become more immersive, integrated and seamlessly connected experiences that bring Walmart closer to customers in new ways. We’re adopting artificial intelligence in its various forms across the company. Take software development for example. When AI is used for software development, more than 40% of the new code is either AI generated or AI assisted. We’re helping our associates build the skills they’ll need to thrive in an AI powered workplace through things like embracing OpenAI certifications and rolling out ChatGPT enterprise licenses. I’ll wrap up by saying thank you and conveying my excitement about our future. Our strategy is clear and we’re focused on innovating and consistently executing to deliver greater sales margins and returns. Our associates continue to impress. They care, they learn, they step up and change. They’re moving forward. They bring our purpose and our values to life. This company and our team’s ability to change should not be underestimated. That ability enables us to adapt and thrive. Our timeless purpose and values, combined with the ability to innovate ensure our strong future. John David, over to you.
John David Rainey (Chief Financial Officer)
Thanks Doug. We’re pleased with how the team executed this quarter and with the strength of our business across markets, continued share gains and disciplined cost control. Our results were better than expected on the top and bottom line and reflect. The advantages of our omnichannel model and. The diversified nature of our profit streams. As we indicated earlier this year, we’re playing offense, accelerating our growth, reinforcing our customer and member value proposition, evolving our model and diversifying our profits. Importantly, we’re delivering on our financial framework of growing profit faster than sales. Our strategy of offering everyday low prices while leveraging our physical and digital assets to provide greater convenience is clearly resonating. Now I’ll get into some of the details of our third quarter performance. Consolidated revenue in constant currency increased 6% or more than $10 billion, led by continued e commerce momentum with 27% growth in all of our markets. We’re getting faster with delivery speeds, reaching more households across…
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sts from tariffs. With our growing 3Pmarketplace, we have the ability to better balance owned and third party inventory, improving our working capital efficiency while still offering the customer a broader assortment. Return on investment as measured over the last 12 months declined slightly primarily due to the phonepay charge discussed earlier. Underlying ROI performance continues to improve supported by capital discipline and operating cash flow strength. The business continues to generate strong cash flow with year to date operating cash flow of $27 billion, up $4.5 billion compared to last year. This provides flexibility to reinvest in the business while at the same time returning significant capital to shareholders. Year to date, we’ve returned nearly $13 billion through dividends and share repurchases. Overall Q3 results demonstrate the underlying strength and resiliency of our business model. Our diverse portfolio of businesses, our scale and our commitment to innovation give us confidence in our ability to deliver sustainable growth. Now turning to guidance Recall at our Investor Day in April, on the heels of the tariff announcements, we said that we’re going to play offense, we said that we would look to gain share, and we said that despite some of the obvious headwinds, we’re not giving up on our goal of growing profits faster than sales. Given the year to date performance and our outlook for Q4, we’re raising our guidance for sales and operating income for the year. Full year sales in constant currency is expected to grow between 4.8% and 5.1%, up from 3.75 to 4.75% prior. This reflects our confidence in our team’s ability to continue driving share gains in Q4 fourth quarter constant currency sales guidance is for growth of 3.75 to 4.75%. Notably, if currency exchange rates stay where they are today for the entire fourth quarter, we would expect a $1.1 billion benefit to reported sales growth. For operating income, we expect full year growth in a range of 4.8% to 5.5% on a constant currency basis with Q4 growth in a range of 8 to 11%. Currency is expected to be an approximate 100 basis point benefit to fourth quarter reported operating income growth. Importantly, despite 150 basis points of headwinds from the Vizio acquisition and lapping leap year, as well as higher than expected claims expense, we still expect to grow operating income faster than sales for the year, which aligns with our longer term financial framework for Q4. Our operating income guide reflects the timing shift of Flipkart’s BBD event as well as the lapping of wage investments in Sam’s Club. US Business mix will continue to be a margin benefit and we expect merchandise category mix to continue to be a headwind for adjusted eps. We expect the full year to be in a range of $2.58 to $2.63, with Q4 in a range of $0.67 to $0.72. The consumer environment remains dynamic and we continue to monitor customer member behavior alongside tracking the macro environment. We’re entering Q4 with strong momentum, healthy inventory and a clear focus on our value proposition, price, convenience and a broad assortment. I’d like to extend my gratitude to our associates who are serving our customers and members every day during a busy holiday season. I’d also like to share that we’re excited to announce that our stock listing will be moving to Nasdaq, aligning with the people led tech powered approach of our long term strategy. Walmart is setting a new standard for omnichannel retail by integrating automation and AI to build smarter, faster and more connected experiences for customers while enabling our associates to deliver even greater value at scale. We are appreciative of our long partnership with such a storied institution as the New York Stock Exchange, but we’re excited about partnering with NASDAQ on this next chapter of our growth story. Lastly, I’d like to say a couple of comments about our leadership change. I think I speak for many people at Walmart when I say that it has been the honor of my career to work alongside Doug. His mark will forever be on Walmart. This company would not be what it is today without his leadership. Doug, we will miss you. At the same time, I can’t think of a better leader to hand over the reins to than John. John was the first person on the Walmart management team that I had the opportunity to meet several years before coming here. And he’s a big reason why I am at Walmart today. Every company should be so fortunate to have such a capable and qualified leader to transition to. John, you have 2.1 million associates standing behind you as you lead us in this next chapter. We’re now ready to take your questions.
Operator
Thank you. We will now be conducting a question and answer session. We ask you, please limit yourself to one question. If you’d like to ask a question at this time, please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you’d like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Thank you. And our first question comes from the line of Simeon Gutman with Morgan Stanley. Please receive their question.
Morgan Stanley Analyst
Good morning. Congratulations, Doug and John. So I have one question and there might be a part A to it. The question is, do you think Agentic will supercharge Walmart’s E Com growth? And in that answer talk about the advantages that can uniquely help Walmart ...
