Walmart Highlights Higher-Income Growth as Lower-Income Shoppers Face Pressure

Talk about raining on the parade. New Walmart CEO John Furner’s first earnings call was dampened by the news Thursday morning (Feb. 19) that it had been surpassed by Amazon in terms of total sales. That and a tepid forecast led to a lackluster start to Furner’s first showing with Wall Street analysts. And while Q4 numbers came in ahead of plan, issues like shopper stress, new profit sources like membership and advertising, and AI dominated the earnings call.

Here are five of the biggest issues:

The consumer looks steady, but the divide is widening: Furner said spending has stayed resilient, but he described a widening gap by income. He said most share gains came from households earning more than $100,000. Households with income below $50,000 are feeling pressure, he said. In his words, “wallets are stretched,” and some shoppers are living “paycheck to paycheck.” He also signaled that convenience is now close to price in importance. That puts pressure on Walmart to hold low prices while also funding faster pickup and delivery.

His example was price investment. He said Walmart U.S. ran 6,200 rollbacks in the quarter, up about 23% from a year ago. CFO John David Rainey said the company is cautiously optimistic on the economy. He also pointed to weaker consumer mood and rising student-loan delinquencies as reasons to stay cautious early in the year.

Membership is moving from a perk to a core business line: Walmart’s leadership treated membership as a platform, not a side benefit. Rainey said membership income rose more than 15% globally, and Walmart+ membership income in the U.S. grew at a double-digit rate. He tied the growth to the core offer and to newer benefits, including the One Pay Cash Rewards credit card.

Furner said Walmart+ had strong sign-ups and high benefit usage. He singled out faster delivery as one of the fastest-growing benefits. Membership also gives Walmart a more predictable base of frequent shoppers. That can help the company plan delivery capacity and encourage repeat trips.

AI is being judged by whether it grows baskets: Walmart offered concrete metrics on artificial intelligence (AI). Furner said shoppers who use the retailer’s “Sparky” AI assistant have an average order size about 35% higher than non-users. Walmart U.S. CEO David Guggina said about half of Walmart’s app users have tried it. Furner positioned agentic commerce as a bridge between digital shopping help and physical fulfillment. The goal is to understand intent, help build a cart, and then deliver through pickup, fast delivery, or an in-store trip. He also cited partnerships with OpenAI and Alphabet.

Ads and seller services are changing how Walmart makes money: Rainey said advertising income and membership fees represented nearly one-third of operating profit in the quarter. He said the Vizio business delivered triple-digit advertising growth.

Walmart is also pushing seller services harder. Rainey said 52% of marketplace sellers use Walmart Fulfillment Services. He said sellers who skip it are “almost using us in the wrong way.” Marketplace remains in investment mode, but management highlighted fast growth in categories like cook-and-dine, fashion and home décor.

Policy headwinds are shaping a cautious outlook: Walmart’s leaders kept returning to the uncertainty that does not stem from customers. Rainey said Q1 operating profit growth will be lower than other quarters because of expense timing and tougher comparisons tied to tariffs. On prices, he said like-for-like inflation ran a little above 1% in the quarter and he expects a similar range.

Drug pricing policy is another headwind. Rainey said “maximum fair pricing” rules around drugs are expected to create about a 100-basis-point headwind for the year. Management called its outlook “prudent,” even while pointing to momentum in digital and higher-margin businesses.

By the numbers, Walmart reported Q4 revenue of $190.7 billion, up 5.6%, with global eCommerce sales up 24%. Operating profit rose 10.8%. Earnings per share were $0.53 as reported and $0.74 adjusted. Walmart announced a new $30 billion share repurchase authorization and guided to FY27 net sales growth of 3.5% to 4.5% in constant currency (excluding currency swings) and adjusted EPS of $2.75 to $2.85.