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Walmart Q3 Fiscal 2026 Earnings Call: Leadership Transition and Strong Performance Across All Segments

MarketDash Editorial Team
17 days ago
Walmart delivered impressive third-quarter results with 5.9% sales growth in constant currency and 8% adjusted operating income growth. The earnings call featured CEO Doug McMillon's final appearance and introduction of incoming CEO John Furner, who takes over in February 2026.

Walmart Inc. (WMT) held its third-quarter fiscal 2026 earnings call on Thursday, delivering results that exceeded expectations while marking a significant moment in the company's history. CEO Doug McMillon made his final appearance in the role, introducing John Furner as his successor effective February 1, 2026.

The retail giant reported consolidated revenue growth of 5.9% in constant currency, with adjusted operating income climbing even faster at 8%. Perhaps most notably, the company demonstrated operating leverage for the first time in two years, a milestone that suggests the investments of recent years are starting to pay off in meaningful ways.

A Passing of the Torch

The call opened with what felt like both an ending and a beginning. Doug McMillon, who has led Walmart through a period of significant transformation, kept his opening remarks characteristically brief and focused on the business rather than himself.

"The team delivered another strong quarter," McMillon said. "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."

John Furner, currently CEO of Walmart U.S. and a 32-year Walmart veteran, expressed both humility and confidence about the transition. "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."

The Numbers Tell a Story of Momentum

Behind the leadership transition narrative sits a business firing on multiple cylinders. Walmart drove positive transaction counts and unit volumes while gaining market share in both grocery and general merchandise. The gains were broad-based across income cohorts, with particular strength among higher-income households—a demographic Walmart has successfully courted over the past several years.

E-commerce was the standout performer once again, growing 27% overall. Every segment delivered e-commerce growth above 20%, demonstrating that Walmart's omnichannel strategy isn't just working in one market or format—it's working everywhere.

The company's emerging profit streams showed even more impressive growth. Advertising revenue jumped 53% (including the Vizio acquisition), while membership income climbed 17%. These alternative revenue sources are increasingly important to Walmart's margin story, helping offset some of the pressure that comes with rapid e-commerce expansion.

International Leads the Charge

Walmart International delivered the strongest performance of any segment, with sales increasing 11.4% in constant currency and adjusted operating income growing 16.9%. Those are impressive numbers for a segment that includes mature markets like Canada alongside high-growth markets like India and China.

Transaction counts and unit volumes increased across markets, and the company continues gaining market share. International e-commerce sales grew 26%, with nearly a third of the international business now digital. In China, e-commerce penetration has reached 50%, and the speed is remarkable—nearly 80% of digital orders arrive in under an hour.

The Flipkart team in India executed what McMillon described as "a record big billion days event." CFO John David Rainey added some color that puts the achievement in perspective: "We did over a billion dollars of sales in the first day and I think we did something like 700 orders per second during the first hour of the event." He noted that it took Walmart much longer to reach a billion dollars in daily sales than it took Flipkart.

Despite the massive sales event being housed in Q3 this year (it occurred in Q4 last year), International still posted 16.9% adjusted operating income growth. Lower e-commerce losses across the segment contributed to the strong bottom-line performance.

Walmart U.S. Keeps the Engine Running

The core Walmart U.S. business delivered comparable sales growth of 4.5%, with e-commerce up 28% and marketplace sales growing 17%. The company continues winning on both transactions and units sold—a sign that customers aren't just shopping more often, they're buying more stuff.

Delivery speed has become a genuine competitive advantage. In Q3, 35% of digital orders were delivered in under three hours. That's not just fast—it's approaching the kind of speed that changes how people think about online shopping for everyday items.

At the category level, general merchandise sales turned positive, with fashion, home, and automotive leading the way. Fashion deserves special mention—it grew over 5% every month of the quarter. For a category that Walmart struggled with not long ago, this represents meaningful progress in convincing customers that Walmart is a legitimate fashion destination.

Grocery performed well with good unit growth, and health and wellness was up low double digits. The company maintained roughly 7,400 active rollbacks in Walmart U.S., with more than half in the grocery category. Since the beginning of the year, more than 2,000 rollbacks have become permanent everyday low prices.

Sam's Club Continues Its Run

Sam's Club U.S. delivered comparable sales of 3.8%, driven by transaction counts and market share gains in both grocery and general merchandise. The comp number might look modest at first glance, but it's important to note that Sam's was lapping two hurricanes and a port strike from the prior year. The two-year stacked comp remained consistent with the first two quarters at around 11%.

The membership warehouse continues executing well on digital engagement. E-commerce sales grew 22%, and the business is profitable—a notable achievement given that many retailers still struggle with e-commerce profitability. Membership metrics remained healthy, with growth in member counts, renewal rates, and Plus member penetration.

Chris Nicholas, who leads Sam's Club, highlighted some operational innovations that are driving results. "We reduced basket minimums for our club members for curbside pickup and we saw a 20% plus pickup which is just great. And the fourth quarter now from a delivery point of view is the fourth quarter in a row that we've seen triple digit growth."

The AI and Technology Story Gets More Interesting

McMillon spent meaningful time discussing how technology and AI are reshaping the Walmart experience, and it's clear the company is thinking beyond simple automation toward something more fundamental.

"We continue building towards an e-commerce experience that is more personalized and relevant, multimodal meaning a voice, text, image and video experience that is more conversational," McMillon explained. "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."

The company recently announced a partnership with OpenAI that will allow customers to purchase items from Walmart and Sam's Club directly through ChatGPT. While it starts with basic checkout functionality, the vision is for "more immersive, integrated and seamlessly connected experiences that bring Walmart closer to customers in new ways."

AI adoption is already showing up in operational metrics. When used for software development, more than 40% of new code is either AI-generated or AI-assisted. The company is rolling out ChatGPT enterprise licenses and embracing OpenAI certifications to help associates build skills for an AI-powered workplace.

John Furner, the incoming CEO, highlighted a feature called Sparky, Walmart's digital agent. "We continue to hit new milestones. I'm also really excited about some of the new capabilities coming over the next few months as Sparky can take more action on behalf of our customers."

Kath McLay, who leads Walmart International, described an intriguing test in Chile called "Carrito Listo" where the company creates shopping baskets for customers based on their purchase history, then sends a WhatsApp prompt asking if they want to buy that basket. Customers have full control to modify it, but the feature has already grown to about 20% of e-commerce business in Chile. The company is bringing the capability to other markets.

Managing Through Tariffs and Inflation

One of the more impressive aspects of Walmart's Q3 performance was how the company navigated tariff pressures while maintaining competitive price gaps. Like-for-like inflation in Walmart U.S. was 1.3%, with food and general merchandise both up low single digits.

Furner explained the approach: "We have about 7,400 active rollbacks in Walmart U.S. 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."

The company is offering strong value for the holiday season. Customers can feed 10 people a Thanksgiving meal for under $4 per person. Butterball turkeys are priced at 97 cents per pound—the lowest price since 2019.

Rainey noted that the tariff impact has been less severe than initially expected, partly due to relief on some key food categories. "I'm really impressed with how the team has managed through tariffs this year. If you look at it holistically, the job they've done to manage inventory, to manage price gaps, to improve our mix with categories like fashion being so strong, that combined with the business mix shifts in the company have enabled us to get through this year and become even stronger as we've done it."

Supply Chain Automation Pays Dividends

The investments Walmart has made in supply chain automation are starting to show up clearly in the financial results. Roughly 50% of fulfillment center volume now comes from automation, translating into lower shipping costs.

"Our shipping costs have been down consistently for many quarters in the 30% range. This was another quarter where we saw double digit improvements," Rainey said. "And that really helps our E commerce economics, but also helps the overall SG&A of the company."

This matters because it challenges the conventional wisdom that there's necessarily a trade-off between value and convenience. Walmart is demonstrating that with the right technology investments, you can offer both everyday low prices and fast, convenient delivery—and do it profitably.

Reading the Consumer Environment

When asked about consumer behavior, Rainey provided a nuanced picture. Overall, the environment feels pretty consistent across the quarter, with no single month standing out as an outlier. But there are pockets of moderation worth watching.

"When we look by low income cohort versus middle versus higher income, we have seen some moderation in spending in the low income cohort," Rainey explained. "And that's consistent with things you've seen from a macro perspective in October wage growth. The disparity in wage growth between those cohorts was as large as it's been in almost a decade."

But he was quick to add context: "I think Walmart is better insulated than just about anybody. Given the value proposition that we have. If pocketbooks are being stretched and consumers are being choiceful and value seeking, it stands to reason if there's more pressure on the consumer, they're only going to become more so. And so we like the value proposition that we're offering for our customers."

Furner emphasized that the company is seeing strength across multiple income cohorts simultaneously. Higher-income customers continued showing accelerated gains throughout the quarter, evidenced by strong performance in categories like apparel. And customers across all income levels are participating in faster delivery options.

Walmart Plus Hits Its Stride

Walmart Plus, the company's membership program, delivered its best quarter for net additions since launch. Several factors are driving the momentum.

First is delivery speed and reliability. With 35% of deliveries arriving in under three hours and the fastest-growing channel being sub-one-hour delivery, the value proposition has strengthened considerably. NPS scores for total delivery and shipping are at all-time highs, highly correlated with speed and accuracy.

Second is the launch of the Walmart One Pay credit card, which allows members to earn 5% back on all purchases. The uptake has been strong.

Third, Walmart added a streaming option for customers to choose, providing additional value beyond shopping benefits.

"Providing this flexibility to our members is really important," Furner said, highlighting how the investments in supply chain and inventory accuracy are enabling the improved delivery experience that's driving membership growth.

Marketplace Becomes a Strategic Asset

Walmart's marketplace business is increasingly important to the overall strategy, now offering more than 500 million SKUs. The growth rates in certain categories are striking—automotive, toys, electronics, and apparel are all growing north of 40% year-over-year.

Rainey emphasized the working capital benefits: "With our growing 3P marketplace, 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."

Furner noted that the company is now using AI to identify gaps in assortment, ensuring that customers can get their entire basket from Walmart. "We're really focused on ensuring that it's the right number of items and the right quality of SKUs that are listed in the assortment," he said.

Guidance Raised on Strength Across the Business

Based on year-to-date performance and the Q4 outlook, Walmart raised its full-year guidance for both sales and operating income.

Full-year sales in constant currency are now expected to grow between 4.8% and 5.1%, up from the prior range of 3.75% to 4.75%. Fourth-quarter constant currency sales guidance calls for growth of 3.75% to 4.75%. If currency exchange rates stay at current levels, there would be a $1.1 billion benefit to reported sales growth in Q4.

For operating income, the company expects 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 provide approximately 100 basis points benefit to fourth-quarter reported operating income growth.

Rainey emphasized an important point: "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."

The Q4 operating income guidance reflects the timing shift of Flipkart's Big Billion Days event and lapping of wage investments in Sam's Club. Business mix will continue to be a margin benefit, while merchandise category mix is expected to remain a headwind.

For adjusted earnings per share, Walmart expects 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.

Moving to NASDAQ

In a symbolic move that underscores the company's tech-forward identity, Rainey announced that Walmart's stock listing will be moving to NASDAQ from the New York Stock Exchange.

"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," Rainey explained. "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."

Capital Discipline Remains a Priority

When asked about whether the leadership transition signals a new phase of investment that might pressure profitability, Furner was clear about continuity in strategy and discipline.

"I've been here at this table with this team for a long time. I'm in my seventh year in the role of Walmart US CEO. I've been a part of developing our strategy on capital for automation. The transformation from having a store business and an E Commerce business to becoming Omni. We have a lot of momentum and I think that strategy is solid."

He emphasized the disciplined approach to capital allocation: "When it comes to capital investments and operational investments in the business, we'll take a disciplined, measured approach to those investments and we'll ensure that they provide the right returns for our shareholders."

Rainey reinforced this point from his perspective as CFO: "I've never worked on a management team that has more alignment around the financial metrics on how to run the business, focusing on the top line, making sure that those sales are profitable, and also focusing on ROI."

The company 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 returning significant capital to shareholders. Year to date, Walmart has returned nearly $13 billion through dividends and share repurchases.

Return on Investment Performance

Return on investment as measured over the last 12 months declined slightly, primarily due to the PhonePe charge discussed earlier in the year. But Rainey noted that underlying ROI performance continues to improve, supported by capital discipline and operating cash flow strength.

This aligns with the management team's stated goal of ensuring ROI increases every year. As Rainey put it, the investments made a decade ago are "starting to pay dividends," and the same expectation exists for current investments.

Looking Ahead to Q4 and the Holiday Season

Management expressed confidence heading into the fourth quarter and holiday season. Halloween and back-to-school performance—typically early indicators for holiday shopping—both showed strong seasonal sell-through.

"Holiday is off to a pretty good start," Rainey said. "Everything that we've seen so far makes us optimistic and encouraged about customers and members leaning into the seasonal events and holiday shopping period."

Inventory management remains strong, with Walmart U.S. inventory up just 2.6%—roughly half the rate of sales growth. This positions the company well for the holiday season with healthy inventory levels while minimizing markdown risks.

There is one specific item to note for January: maximum fair pricing legislation that goes into effect will affect the health and wellness business, specifically pharmacy. This will influence the comparable sales number in January, though the overall health and wellness business is still expected to continue growing.

A Moment of Reflection and Gratitude

In his closing comments, McMillon took a moment to reflect on his tenure and express gratitude to the analysts who have covered the company over the years.

"I really appreciate the relationships that we developed over the years, appreciate how closely you followed the company, the pressure, healthy pressure you put on us, the critical thinking test you've given us. And I think the company's better off because of your engagement and just want to say thank you. I'll miss you guys."

He shared his perspective on why Walmart is well-positioned for any economic environment: "What a great business this is in any environment. You know, you've seen times when the customer has more money and how Walmart's well positioned. And in times when people are pressured, they come to us. And now the business is stronger in terms of our ability to make it more convenient to shop with us. I think that's been a big development. We're not just known for price, we're known for more than that now."

Looking ahead, McMillon expressed confidence in the runway ahead: "I have a high degree of confidence in the potential and what this company will deliver with John's leadership and with this leadership team. And I'll be cheering them on and helping in any way that I can."

Rainey added his own tribute: "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."

And regarding Furner: "I can't think of a better leader to hand over the reins to than John. 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."

The Bottom Line

Walmart's Q3 results demonstrate a business executing well across multiple dimensions. The company is growing sales, gaining market share, improving margins, generating strong cash flow, and investing in capabilities that should drive growth for years to come.

The leadership transition from McMillon to Furner comes at a moment of strength rather than weakness, with momentum across all segments and geographies. The strategy is clear, the execution is consistent, and the investments in technology and automation are paying off in measurable ways.

Perhaps most importantly, Walmart has successfully repositioned itself in customers' minds as more than just a low-price destination. The company now competes effectively on convenience, speed, assortment, and experience—while maintaining its price advantage. That's a powerful combination that should serve the company well regardless of what the economic environment brings.

As McMillon noted, the company's ability to adapt and thrive should not be underestimated. With Furner taking the helm, a strong management team in place, and clear strategic priorities, Walmart appears well-positioned for its next chapter of growth.

Back to News

Walmart Q3 Fiscal 2026 Earnings Call: Leadership Transition and Strong Performance Across All Segments

MarketDash Editorial Team
17 days ago
Walmart delivered impressive third-quarter results with 5.9% sales growth in constant currency and 8% adjusted operating income growth. The earnings call featured CEO Doug McMillon's final appearance and introduction of incoming CEO John Furner, who takes over in February 2026.

Walmart Inc. (WMT) held its third-quarter fiscal 2026 earnings call on Thursday, delivering results that exceeded expectations while marking a significant moment in the company's history. CEO Doug McMillon made his final appearance in the role, introducing John Furner as his successor effective February 1, 2026.

The retail giant reported consolidated revenue growth of 5.9% in constant currency, with adjusted operating income climbing even faster at 8%. Perhaps most notably, the company demonstrated operating leverage for the first time in two years, a milestone that suggests the investments of recent years are starting to pay off in meaningful ways.

A Passing of the Torch

The call opened with what felt like both an ending and a beginning. Doug McMillon, who has led Walmart through a period of significant transformation, kept his opening remarks characteristically brief and focused on the business rather than himself.

"The team delivered another strong quarter," McMillon said. "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."

John Furner, currently CEO of Walmart U.S. and a 32-year Walmart veteran, expressed both humility and confidence about the transition. "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."

The Numbers Tell a Story of Momentum

Behind the leadership transition narrative sits a business firing on multiple cylinders. Walmart drove positive transaction counts and unit volumes while gaining market share in both grocery and general merchandise. The gains were broad-based across income cohorts, with particular strength among higher-income households—a demographic Walmart has successfully courted over the past several years.

E-commerce was the standout performer once again, growing 27% overall. Every segment delivered e-commerce growth above 20%, demonstrating that Walmart's omnichannel strategy isn't just working in one market or format—it's working everywhere.

The company's emerging profit streams showed even more impressive growth. Advertising revenue jumped 53% (including the Vizio acquisition), while membership income climbed 17%. These alternative revenue sources are increasingly important to Walmart's margin story, helping offset some of the pressure that comes with rapid e-commerce expansion.

International Leads the Charge

Walmart International delivered the strongest performance of any segment, with sales increasing 11.4% in constant currency and adjusted operating income growing 16.9%. Those are impressive numbers for a segment that includes mature markets like Canada alongside high-growth markets like India and China.

Transaction counts and unit volumes increased across markets, and the company continues gaining market share. International e-commerce sales grew 26%, with nearly a third of the international business now digital. In China, e-commerce penetration has reached 50%, and the speed is remarkable—nearly 80% of digital orders arrive in under an hour.

The Flipkart team in India executed what McMillon described as "a record big billion days event." CFO John David Rainey added some color that puts the achievement in perspective: "We did over a billion dollars of sales in the first day and I think we did something like 700 orders per second during the first hour of the event." He noted that it took Walmart much longer to reach a billion dollars in daily sales than it took Flipkart.

Despite the massive sales event being housed in Q3 this year (it occurred in Q4 last year), International still posted 16.9% adjusted operating income growth. Lower e-commerce losses across the segment contributed to the strong bottom-line performance.

Walmart U.S. Keeps the Engine Running

The core Walmart U.S. business delivered comparable sales growth of 4.5%, with e-commerce up 28% and marketplace sales growing 17%. The company continues winning on both transactions and units sold—a sign that customers aren't just shopping more often, they're buying more stuff.

Delivery speed has become a genuine competitive advantage. In Q3, 35% of digital orders were delivered in under three hours. That's not just fast—it's approaching the kind of speed that changes how people think about online shopping for everyday items.

At the category level, general merchandise sales turned positive, with fashion, home, and automotive leading the way. Fashion deserves special mention—it grew over 5% every month of the quarter. For a category that Walmart struggled with not long ago, this represents meaningful progress in convincing customers that Walmart is a legitimate fashion destination.

Grocery performed well with good unit growth, and health and wellness was up low double digits. The company maintained roughly 7,400 active rollbacks in Walmart U.S., with more than half in the grocery category. Since the beginning of the year, more than 2,000 rollbacks have become permanent everyday low prices.

Sam's Club Continues Its Run

Sam's Club U.S. delivered comparable sales of 3.8%, driven by transaction counts and market share gains in both grocery and general merchandise. The comp number might look modest at first glance, but it's important to note that Sam's was lapping two hurricanes and a port strike from the prior year. The two-year stacked comp remained consistent with the first two quarters at around 11%.

The membership warehouse continues executing well on digital engagement. E-commerce sales grew 22%, and the business is profitable—a notable achievement given that many retailers still struggle with e-commerce profitability. Membership metrics remained healthy, with growth in member counts, renewal rates, and Plus member penetration.

Chris Nicholas, who leads Sam's Club, highlighted some operational innovations that are driving results. "We reduced basket minimums for our club members for curbside pickup and we saw a 20% plus pickup which is just great. And the fourth quarter now from a delivery point of view is the fourth quarter in a row that we've seen triple digit growth."

The AI and Technology Story Gets More Interesting

McMillon spent meaningful time discussing how technology and AI are reshaping the Walmart experience, and it's clear the company is thinking beyond simple automation toward something more fundamental.

"We continue building towards an e-commerce experience that is more personalized and relevant, multimodal meaning a voice, text, image and video experience that is more conversational," McMillon explained. "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."

The company recently announced a partnership with OpenAI that will allow customers to purchase items from Walmart and Sam's Club directly through ChatGPT. While it starts with basic checkout functionality, the vision is for "more immersive, integrated and seamlessly connected experiences that bring Walmart closer to customers in new ways."

AI adoption is already showing up in operational metrics. When used for software development, more than 40% of new code is either AI-generated or AI-assisted. The company is rolling out ChatGPT enterprise licenses and embracing OpenAI certifications to help associates build skills for an AI-powered workplace.

John Furner, the incoming CEO, highlighted a feature called Sparky, Walmart's digital agent. "We continue to hit new milestones. I'm also really excited about some of the new capabilities coming over the next few months as Sparky can take more action on behalf of our customers."

Kath McLay, who leads Walmart International, described an intriguing test in Chile called "Carrito Listo" where the company creates shopping baskets for customers based on their purchase history, then sends a WhatsApp prompt asking if they want to buy that basket. Customers have full control to modify it, but the feature has already grown to about 20% of e-commerce business in Chile. The company is bringing the capability to other markets.

Managing Through Tariffs and Inflation

One of the more impressive aspects of Walmart's Q3 performance was how the company navigated tariff pressures while maintaining competitive price gaps. Like-for-like inflation in Walmart U.S. was 1.3%, with food and general merchandise both up low single digits.

Furner explained the approach: "We have about 7,400 active rollbacks in Walmart U.S. 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."

The company is offering strong value for the holiday season. Customers can feed 10 people a Thanksgiving meal for under $4 per person. Butterball turkeys are priced at 97 cents per pound—the lowest price since 2019.

Rainey noted that the tariff impact has been less severe than initially expected, partly due to relief on some key food categories. "I'm really impressed with how the team has managed through tariffs this year. If you look at it holistically, the job they've done to manage inventory, to manage price gaps, to improve our mix with categories like fashion being so strong, that combined with the business mix shifts in the company have enabled us to get through this year and become even stronger as we've done it."

Supply Chain Automation Pays Dividends

The investments Walmart has made in supply chain automation are starting to show up clearly in the financial results. Roughly 50% of fulfillment center volume now comes from automation, translating into lower shipping costs.

"Our shipping costs have been down consistently for many quarters in the 30% range. This was another quarter where we saw double digit improvements," Rainey said. "And that really helps our E commerce economics, but also helps the overall SG&A of the company."

This matters because it challenges the conventional wisdom that there's necessarily a trade-off between value and convenience. Walmart is demonstrating that with the right technology investments, you can offer both everyday low prices and fast, convenient delivery—and do it profitably.

Reading the Consumer Environment

When asked about consumer behavior, Rainey provided a nuanced picture. Overall, the environment feels pretty consistent across the quarter, with no single month standing out as an outlier. But there are pockets of moderation worth watching.

"When we look by low income cohort versus middle versus higher income, we have seen some moderation in spending in the low income cohort," Rainey explained. "And that's consistent with things you've seen from a macro perspective in October wage growth. The disparity in wage growth between those cohorts was as large as it's been in almost a decade."

But he was quick to add context: "I think Walmart is better insulated than just about anybody. Given the value proposition that we have. If pocketbooks are being stretched and consumers are being choiceful and value seeking, it stands to reason if there's more pressure on the consumer, they're only going to become more so. And so we like the value proposition that we're offering for our customers."

Furner emphasized that the company is seeing strength across multiple income cohorts simultaneously. Higher-income customers continued showing accelerated gains throughout the quarter, evidenced by strong performance in categories like apparel. And customers across all income levels are participating in faster delivery options.

Walmart Plus Hits Its Stride

Walmart Plus, the company's membership program, delivered its best quarter for net additions since launch. Several factors are driving the momentum.

First is delivery speed and reliability. With 35% of deliveries arriving in under three hours and the fastest-growing channel being sub-one-hour delivery, the value proposition has strengthened considerably. NPS scores for total delivery and shipping are at all-time highs, highly correlated with speed and accuracy.

Second is the launch of the Walmart One Pay credit card, which allows members to earn 5% back on all purchases. The uptake has been strong.

Third, Walmart added a streaming option for customers to choose, providing additional value beyond shopping benefits.

"Providing this flexibility to our members is really important," Furner said, highlighting how the investments in supply chain and inventory accuracy are enabling the improved delivery experience that's driving membership growth.

Marketplace Becomes a Strategic Asset

Walmart's marketplace business is increasingly important to the overall strategy, now offering more than 500 million SKUs. The growth rates in certain categories are striking—automotive, toys, electronics, and apparel are all growing north of 40% year-over-year.

Rainey emphasized the working capital benefits: "With our growing 3P marketplace, 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."

Furner noted that the company is now using AI to identify gaps in assortment, ensuring that customers can get their entire basket from Walmart. "We're really focused on ensuring that it's the right number of items and the right quality of SKUs that are listed in the assortment," he said.

Guidance Raised on Strength Across the Business

Based on year-to-date performance and the Q4 outlook, Walmart raised its full-year guidance for both sales and operating income.

Full-year sales in constant currency are now expected to grow between 4.8% and 5.1%, up from the prior range of 3.75% to 4.75%. Fourth-quarter constant currency sales guidance calls for growth of 3.75% to 4.75%. If currency exchange rates stay at current levels, there would be a $1.1 billion benefit to reported sales growth in Q4.

For operating income, the company expects 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 provide approximately 100 basis points benefit to fourth-quarter reported operating income growth.

Rainey emphasized an important point: "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."

The Q4 operating income guidance reflects the timing shift of Flipkart's Big Billion Days event and lapping of wage investments in Sam's Club. Business mix will continue to be a margin benefit, while merchandise category mix is expected to remain a headwind.

For adjusted earnings per share, Walmart expects 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.

Moving to NASDAQ

In a symbolic move that underscores the company's tech-forward identity, Rainey announced that Walmart's stock listing will be moving to NASDAQ from the New York Stock Exchange.

"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," Rainey explained. "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."

Capital Discipline Remains a Priority

When asked about whether the leadership transition signals a new phase of investment that might pressure profitability, Furner was clear about continuity in strategy and discipline.

"I've been here at this table with this team for a long time. I'm in my seventh year in the role of Walmart US CEO. I've been a part of developing our strategy on capital for automation. The transformation from having a store business and an E Commerce business to becoming Omni. We have a lot of momentum and I think that strategy is solid."

He emphasized the disciplined approach to capital allocation: "When it comes to capital investments and operational investments in the business, we'll take a disciplined, measured approach to those investments and we'll ensure that they provide the right returns for our shareholders."

Rainey reinforced this point from his perspective as CFO: "I've never worked on a management team that has more alignment around the financial metrics on how to run the business, focusing on the top line, making sure that those sales are profitable, and also focusing on ROI."

The company 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 returning significant capital to shareholders. Year to date, Walmart has returned nearly $13 billion through dividends and share repurchases.

Return on Investment Performance

Return on investment as measured over the last 12 months declined slightly, primarily due to the PhonePe charge discussed earlier in the year. But Rainey noted that underlying ROI performance continues to improve, supported by capital discipline and operating cash flow strength.

This aligns with the management team's stated goal of ensuring ROI increases every year. As Rainey put it, the investments made a decade ago are "starting to pay dividends," and the same expectation exists for current investments.

Looking Ahead to Q4 and the Holiday Season

Management expressed confidence heading into the fourth quarter and holiday season. Halloween and back-to-school performance—typically early indicators for holiday shopping—both showed strong seasonal sell-through.

"Holiday is off to a pretty good start," Rainey said. "Everything that we've seen so far makes us optimistic and encouraged about customers and members leaning into the seasonal events and holiday shopping period."

Inventory management remains strong, with Walmart U.S. inventory up just 2.6%—roughly half the rate of sales growth. This positions the company well for the holiday season with healthy inventory levels while minimizing markdown risks.

There is one specific item to note for January: maximum fair pricing legislation that goes into effect will affect the health and wellness business, specifically pharmacy. This will influence the comparable sales number in January, though the overall health and wellness business is still expected to continue growing.

A Moment of Reflection and Gratitude

In his closing comments, McMillon took a moment to reflect on his tenure and express gratitude to the analysts who have covered the company over the years.

"I really appreciate the relationships that we developed over the years, appreciate how closely you followed the company, the pressure, healthy pressure you put on us, the critical thinking test you've given us. And I think the company's better off because of your engagement and just want to say thank you. I'll miss you guys."

He shared his perspective on why Walmart is well-positioned for any economic environment: "What a great business this is in any environment. You know, you've seen times when the customer has more money and how Walmart's well positioned. And in times when people are pressured, they come to us. And now the business is stronger in terms of our ability to make it more convenient to shop with us. I think that's been a big development. We're not just known for price, we're known for more than that now."

Looking ahead, McMillon expressed confidence in the runway ahead: "I have a high degree of confidence in the potential and what this company will deliver with John's leadership and with this leadership team. And I'll be cheering them on and helping in any way that I can."

Rainey added his own tribute: "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."

And regarding Furner: "I can't think of a better leader to hand over the reins to than John. 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."

The Bottom Line

Walmart's Q3 results demonstrate a business executing well across multiple dimensions. The company is growing sales, gaining market share, improving margins, generating strong cash flow, and investing in capabilities that should drive growth for years to come.

The leadership transition from McMillon to Furner comes at a moment of strength rather than weakness, with momentum across all segments and geographies. The strategy is clear, the execution is consistent, and the investments in technology and automation are paying off in measurable ways.

Perhaps most importantly, Walmart has successfully repositioned itself in customers' minds as more than just a low-price destination. The company now competes effectively on convenience, speed, assortment, and experience—while maintaining its price advantage. That's a powerful combination that should serve the company well regardless of what the economic environment brings.

As McMillon noted, the company's ability to adapt and thrive should not be underestimated. With Furner taking the helm, a strong management team in place, and clear strategic priorities, Walmart appears well-positioned for its next chapter of growth.