Walmart reported a strong surge in its U.S. eCommerce operations, posting a 21% increase in online sales and achieving domestic profitability for the first time in this segment—a milestone that may help counterbalance rising tariff-related costs and broader supply chain disruptions.
During the company’s fiscal Q1 earnings call, executives highlighted tariffs as a pressing challenge, creating steep and unpredictable cost pressures. Due to the inherently slim margins in retail, especially on products sourced from China, Walmart said it is unable to fully absorb these new expenses.
Although total first-quarter revenue rose by 2.5% to $165.6 billion—below its earlier forecast of 3% to 4%—Walmart saw encouraging signs in consumer behavior. U.S. comparable store sales were up 4.5%, driven by a 1.6% increase in transactions and a 2.8% gain in average basket size, as shoppers sought speed and value across income levels.
eCommerce and Delivery Drive Growth
CEO Doug McMillon noted that all major segments of the business saw eCommerce growth of at least 20%, with rapid delivery capabilities emerging as a key competitive edge. “We’re approaching 95% coverage of the U.S. population with delivery options under three hours,” he said. Deliveries completed in under three hours jumped 91% compared to a year ago.
Growth was also fueled by strength in health, wellness, and grocery categories, as well as a 31% increase in digital ad revenue through Walmart Connect. Membership income rose 3.8%, with double-digit growth in Walmart+ subscriptions.
CFO John David Rainey emphasized the company’s digital momentum, confirming eCommerce profitability in both the U.S. and global operations for the first time. Improved logistics and growing customer demand for fast delivery have helped reduce net delivery costs, especially as users pay premiums for faster service.
Tariffs Add Volatility to Forecasting
Tariff impacts, particularly those involving goods from China, began exerting stronger pressure in late April and intensified into May. McMillon acknowledged that while over two-thirds of Walmart’s inventory is sourced domestically, the financial strain from tariffs is being felt company-wide.
“We’ll do our best to keep prices down, but the scale of the tariffs means we can't avoid passing some costs onto consumers,” McMillon explained. Instead of applying tariffs directly to individual products, Walmart is adjusting category mixes and overall pricing strategies to cushion the blow.
Despite the uncertainty, Walmart maintained its full-year sales growth guidance of 4%, and projected Q2 revenue growth between 3.5% and 4.5%. However, the company withheld forward earnings guidance due to the volatile nature of current trade policy and macroeconomic dynamics.
Omnichannel and Membership Momentum
Sam’s Club also performed well, with U.S. comparable sales (excluding fuel) rising nearly 7%, and eCommerce sales for the segment up 27%. Club-fulfilled deliveries surged by triple digits, while digital transactions, including “Scan and Go” usage, expanded with more than half of Sam’s Club members engaging digitally in some form.
Walmart+ memberships also showed strong performance, with income from subscriptions growing by 9.5%.
Rainey cautioned analysts about the potential for quarter-to-quarter margin swings, citing the unpredictable costs now affecting the retailer’s inventory due to tariffs. He emphasized that even with efficient cost management, the environment remains “highly fluid.”
Still, Walmart’s scale, growing membership base, and diversified revenue streams are providing some buffer against the headwinds. McMillon added that increased delivery density—serving multiple households in a single trip—combined with customers’ willingness to pay for speed, is driving efficiencies and revenue growth.
“Our customers are embracing convenience,” he said, “and that’s helping us adapt and grow, even in a challenging landscape.”
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