Walmart shares fell 1.6% to $102.62 at the latest close. The latest filing describes a business that sold more, expanded operating profit, and generated more cash over six months, but still produced less net income.
Revenue rose 5.9% to $187.9 billion for the six months ended July 31. Operating income climbed 28.8% to $9.4 billion, lifting the operating margin to 5.0% from 4.1%. Net income went the other way, falling 9.4% to $6.4 billion, with diluted EPS down to $0.80 from $0.88.
That split is the useful part of the filing. Walmart is showing operating improvement, while costs attached to running and expanding the business rose as net income fell. The company spent $14.2 billion on capital expenditures, up 24.3%, while inventory reached $61.6 billion, growing faster than revenue.
Management attributed the higher operating costs over the six months to three concrete items: depreciation from capital investments, associate healthcare benefits, and self-insured liability claims.
"The increase for the six months ended July 31, 2026 was primarily driven by increased depreciation related to our capital investments, higher associate healthcare benefit costs and higher self-insured general liability claims expense."
Walmart, 10-Q filed Aug. 28, 2026
In plain English, the investment program is showing up twice: as cash leaving the business and as depreciation entering expenses. Healthcare enrollment and medical-cost inflation add separate pressure, while self-insured liability claims expense also increased.
There was also help on the gross-profit line, though it came with its own footnote. Walmart said the gross-profit rate for the six months rose 53 basis points, primarily because of tariff refunds, partly offset by price investments and higher fuel costs in its supply chain.
"Gross profit as a percentage of net sales (\"gross profit rate\") increased 96 and 53 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year, primarily due to tariff refunds, partially offset by price investments and higher fuel costs within our supply chain."
Walmart, 10-Q filed Aug. 28, 2026
That makes the 5.0% operating margin an important figure, but not a simple read on underlying pricing power. The period benefited from tariff refunds, while Walmart also disclosed price investments and higher supply-chain fuel costs. The filing does not give one consolidated reason for the net-income decline beyond the operating and other disclosed changes.
Cash generation was stronger, though not at the same pace as profit expansion. Operating cash flow rose 7.4% to $19.7 billion, and cash on hand increased to $11.5 billion. Free-cash-flow margin declined by 0.5 percentage points as capital spending consumed more of revenue.
The sales mix adds some scale to the result. Walmart International grew 12.8% to $35.2 billion, while Walmart U.S. rose 3.5% to $125.2 billion. Sam's Club U.S. also grew, leaving the overall increase spread across the three reported businesses rather than concentrated in one line.
Walmart's annual results show a familiar backdrop: revenue reached $706.4 billion in the fiscal year ended January 31, 2026, up 4.7%, with a 4.2% operating margin. The latest six-month figures therefore show faster sales and operating-profit growth than that annual baseline, alongside a heavier investment load and a lower net margin.
Walmart's next quarterly report will put the $61.6 billion inventory balance against the next sales figure, with capital spending and the 5.0% operating margin providing the other two numbers to compare.
Walmart's 10-Q reported inventory of $61.6B.