⚠ Half the Growth Is the Price of FoodModerate threat
Walmart (WMT) — threat to the moat
Inflation flatters a grocer's reported growth and flatters nothing underneath it.
Grocery net sales at Walmart U.S. rose 3.4% in fiscal 2026, to $285,482 million1. In the June 2026 quarter like-for-like inflation across the segment ran 1.4%2. Put those beside each other and a large share of the growth in Walmart's largest category is the same food costing more.
That is not a criticism of Walmart, which does not set food prices. It is a warning about how to read the number. Inflation flatters a grocer's reported growth and flatters nothing underneath it: the same trolley, at a higher ring, with no additional customer and no additional unit. When inflation subsides the reported growth rate falls even if the business is unchanged, and when it turns to deflation — as it just has in pharmacy — the number goes backwards.
The evidence that this is the dominant mechanism sits in the comparable-sales composition. In the June quarter Walmart U.S. transactions excluding fuel rose 1.5% and average ticket 1.1%3. Both are positive, which is the good news; both are small relative to a headline comp of 2.6%, which is the honest news.
There is a second-order effect worth naming. Food inflation is also what drives affluent households into Walmart, so the same force that flatters the top line is producing the customer mix improvement the company is reporting. Both unwind together.
Count units rather than dollars. Walmart does not publish a clean unit figure, so use transactions excluding fuel: 1.5% in the June 2026 quarter4. That is the number that says more people are shopping, and it is the one that survives a deflationary year.
- Moat Explorer calcGrocery net sales at Walmart U.S. rose 3.4% in fiscal 2026, to $285,482 million.Moat Explorer calculation from figures in Walmart's own filings: global eCommerce of about $150.4 billion (Walmart U.S. $99.6B + International $35.8B + Sam's Club $15.0B) against $120.9 billion, a $29.5 billion increase against a $31,875M rise in net sales ($706,413M against $674,538M), about 92%; Walmart U.S. selling floor of 698.7 million square feet (633,724 + 36,609 + 28,375 thousand) and net sales per store of $104.7 million ($482,975M over 4,611 stores); operating margin 4.18% ($29,825M/$713,163M) against 4.31% ($27,012M/$648,125M); net margin 3.07%; gross profit rate 24.2% ($171,018M/$706,413M); grocery 59.1% of Walmart U.S. net sales ($285,482M/$482,975M) against 59.8% ($264,210M/$441,817M) and grocery growth of 3.4%; general merchandise to grocery ratio 0.40 against 0.43; health and wellness +26.7% ($54,898M to $69,547M); payables less inventories $4,210M ($63,061M less $58,851M); rent 0.34% of revenue ($2,434M/$713,163M); capital expenditure 64% of operating cash flow ($26,642M/$41,565M); a 1% overrun on $147,943M of expense is $1,479M; eCommerce penetration 27.5% international ($35.8B/$130,423M) and 20.6% at Walmart U.S. ($99.6B/$482,975M); shareholder returns $15,587M ($7,507M dividends plus $8,080M repurchases) against $14,923M of free cash flow; Q2 FY2027 net income attributable down 9.4% ($6,366M against $7,026M); Walmart U.S. comparable sales of about 3.9% excluding the 125 basis point pharmacy headwind — FY2024-Q2 FY2027 · publ. September 2026 · source ↗
- ReportedIn the June 2026 quarter like-for-like inflation across the segment ran 1.4%.Walmart second-quarter fiscal 2027 earnings presentation (Form 8-K exhibit 99.2) - Walmart U.S. comp sales +2.6% with transactions excluding fuel +1.5% and average ticket excluding fuel +1.1% against total like-for-like inflation of 1.4%, and an approximately 125 basis point pharmacy headwind from maximum fair price regulation; eCommerce +24% including approximately 43% growth in store-fulfilled delivery, total advertising +38% including Walmart Connect +43%, and Marketplace sales +52%; expedited deliveries under three hours approximately 37% of store-fulfilled orders; share gains across categories and income tiers led by upper-income households — Q2 FY2027 · publ. August 20, 2026 · source ↗
- ReportedIn the June quarter Walmart U.S. transactions excluding fuel rose 1.5% and average ticket 1.1%.Walmart second-quarter fiscal 2027 earnings presentation (Form 8-K exhibit 99.2) - Walmart U.S. comp sales +2.6% with transactions excluding fuel +1.5% and average ticket excluding fuel +1.1% against total like-for-like inflation of 1.4%, and an approximately 125 basis point pharmacy headwind from maximum fair price regulation; eCommerce +24% including approximately 43% growth in store-fulfilled delivery, total advertising +38% including Walmart Connect +43%, and Marketplace sales +52%; expedited deliveries under three hours approximately 37% of store-fulfilled orders; share gains across categories and income tiers led by upper-income households — Q2 FY2027 · publ. August 20, 2026 · source ↗
- ReportedWalmart does not publish a clean unit figure, so use transactions excluding fuel: 1.5% in the June 2026 quarter.Walmart second-quarter fiscal 2027 earnings presentation (Form 8-K exhibit 99.2) - Walmart U.S. comp sales +2.6% with transactions excluding fuel +1.5% and average ticket excluding fuel +1.1% against total like-for-like inflation of 1.4%, and an approximately 125 basis point pharmacy headwind from maximum fair price regulation; eCommerce +24% including approximately 43% growth in store-fulfilled delivery, total advertising +38% including Walmart Connect +43%, and Marketplace sales +52%; expedited deliveries under three hours approximately 37% of store-fulfilled orders; share gains across categories and income tiers led by upper-income households — Q2 FY2027 · publ. August 20, 2026 · source ↗