Walmart (WMT) earnings Q1 2027

Walmart issued a worse-than-expected financial outlook on Thursday as it reported fiscal first-quarter results, raising questions about the health of the U.S. consumer as high gas prices strain shopper budgets.

The mega retailer stood by its fiscal 2027 outlook, which disappointed investors last quarter when it was issued. The retailer said it’s expecting adjusted earnings per share to be between $2.75 and $2.85, lower than expectations of $2.91, according to LSEG. Walmart said it anticipates net sales will rise between 3.5% and 4.5% for the year.

The retailer also issued its outlook for its current quarter, which came in light of expectations, as well. It expects adjusted earnings per share will be between 72 cents and 74 cents, missing expectations of 75 cents. Walmart anticipates net sales will climb 4% to 5% during the quarter.

The retailer’s shares dropped about 8% in morning trading.

Walmart’s weaker-than-expected outlook comes as the largest U.S. retailer and its peers post relatively strong sales for the first quarter. The company’s revenue rose 7% in the first quarter, beating estimates, and same-store sales climbed 4.1%, in line with expectations, as the value player continues to see gains in its e-commerce business and with higher-income shoppers.

So far this earnings season, other major companies have also said consumer spending has held up in the face of higher gas prices and growing worries about the state of the economy. But that resilience also came amid higher tax returns, which Target said on Wednesday may have fueled some of the growth it saw during the first quarter.

In an interview with CNBC, Walmart finance chief John David Rainey also said consumers may feel more strain as the effect of tax returns goes away in the second quarter.

“I think higher tax returns muted some of the pressure related to higher fuel prices and as we’re in a period of time right now where those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices,” said Rainey. “It’s something that we’re keeping a close eye on, but that expectation is built into our guidance for the second quarter.”

He said that Walmart’s fiscal second-quarter guidance for operating income is the best the retailer’s given in maybe a decade and a half, and came as the company saw a $175 million headwind from higher fuel prices.

“It’ll probably be larger than that in the second quarter if fuel prices stay where they are, so we’re absorbing those prices and still maintaining our guidance, and I feel really good about that,” said Rainey.

On a call with analysts Thursday, Rainey made clear the company is still performing well despite macroeconomic pressures.

“While there are certainly pressures on the consumer, let me reiterate: our business is strong,” said Rainey. “We are executing on the important strategic initiatives that are critical to our future sales and earnings growth. Our delivery speed and capabilities continue…