Walmart Inc. WMT continues to demonstrate how its omnichannel model is evolving beyond traditional retail, with e-commerce becoming an increasingly important driver of growth and profitability. The company’s first-quarter fiscal 2027 results underscored strong digital momentum, supported by faster fulfillment capabilities, marketplace expansion and growing contributions from higher-margin revenue streams.
Global e-commerce sales increased 26% in the quarter, led by store-fulfilled pickup and delivery as well as marketplace growth. The strength was evident across segments, with Walmart U.S. e-commerce sales rising 26%, Walmart International e-commerce sales advancing 27%, and Sam’s Club U.S. e-commerce sales growing 23%.
As digital sales scale, the focus is shifting from growth alone to the profitability of that growth. Walmart U.S. adjusted operating income rose 5.7% to $6 billion, while the adjusted operating income rate improved 6 basis points to 5.1%. The gain was aided by improved e-commerce economics, Walmart+ membership growth and other income benefits.
The company’s extensive store network remains a key advantage. Store-fulfilled delivery in Walmart U.S. grew about 45% in the quarter, and more than 36% of store-fulfilled deliveries were completed in less than three hours. Globally, Walmart delivered more than 3.5 billion units on the same day or the next day.
Even so, margin expansion remains a work in progress. Consolidated gross profit rate increased 6 basis points to 24.3%, but operating expenses continued to face pressure from higher fuel costs, depreciation and healthcare expenses. While near-term expenses remained elevated, the quarter suggested that Walmart’s growing e-commerce scale is increasingly being supported by better fulfillment economics and a richer mix of higher-margin digital revenues.
E-commerce Gains Put TGT and COST Margins in Focus
Target Corporation TGT is also benefiting from growing digital demand. In its first quarter, TGT reported comparable digital sales growth of 8.9%, driven by more than 27% growth in same-day delivery through Target Circle 360. Gross margin expanded to 29% from 28.2%, while adjusted operating margin improved to 4.5% from 3.7%.
Costco Wholesale Corporation COST continues to post robust online-related growth. Digitally enabled comparable sales increased 21.1% in May and 21.6% for the first 39 weeks of the fiscal year. Total comparable sales rose 12.5% in May, while net sales increased 14.5% to $24.01 billion. COST’s strong digitally enabled sales growth highlights the growing importance of e-commerce and convenience-led shopping across the retail landscape.
WMT Stock Price Performance, Valuation & Estimates
Shares of Walmart have risen 22% over the past year compared with the industry’s growth of 20.3%.
WMT Price Performance Versus Industry
Image Source: Zacks Investment Research
From a valuation standpoint, WMT trades at a forward price-to-earnings ratio of 39.36, higher than the industry’s average of 35.83.
WMT Valuation Compared to Industry
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WMT’s current and next fiscal year earnings per share implies year-over-year growth of 9.5% and 13.3%, respectively.
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).