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Walmart's second quarter looks like a blowout and mostly isn't. Adjusted operating income grew 17.4% in constant currency, and roughly 750 basis points of that came from tariff refunds that landed inside the quarter. Strip them out and underlying growth sat at the top end of the 7% to 10% Q2 guide, which is where management said in May it would be.

CFO John David Rainey asked analysts twice to evaluate Q2 and Q3 together. Walmart put a large portion of the refund to work at the end of Q2, with more still to come in the second half, so the cost of that spending lands in the next quarter rather than this one. Averaged across the pair, operating income grows about 10% per quarter. Q3 on its own is guided to 2% to 4% in constant currency.

The refund ran about $2.9B, roughly half a percent of annual U.S. net sales, and Walmart says it has now received substantially all of it. Nearly all of it went into price. Walmart U.S. ran more than 11K rollbacks in the quarter against 7,200 at the end of Q1, and management says price gaps to conventional grocers keep widening. Every large importer was eligible for the same refunds. Walmart is the one with the balance sheet to hand the entire amount back at the register rather than bank it, and with enough share already that the spending compounds against everyone it meets on basket price.

Marketplace and fulfillment services net sales for Walmart U.S. grew 52%. Global advertising grew 38%, with Walmart Connect up 43%. Membership income grew nearly 17%, and Walmart+ recorded its best first half of membership growth on record. Global eCommerce grew 23%, the tenth consecutive quarter above 20% in the U.S. And Walmart U.S. eCommerce turned double-digit incremental margins across the first half, the first real answer to the objection that has followed the digital business for a decade, that it only grows by burning cash.

Almost half of marketplace volume now flows through Walmart Fulfillment Services (WFS), up nearly 400 basis points year over year. Fee-based fast delivery reached an all-time high of 37% of store-fulfilled deliveries, and more than half of eCommerce fulfillment volume moves through automated facilities.

Health and wellness is where the quarter got soft, and Walmart spent real airtime fencing it off from everything else. Maximum Fair Price regulation cost 125 basis points of U.S. comp in Q2, and the full-year estimate was revised up from 100 to match. The GLP-1 tailwind, worth 100 basis points in each of the last two fiscal years, is expected to run about half that in FY27 as script growth gets offset by price and mix. Core categories excluding health and wellness have held 3% to 4% for two and a half years. Total U.S. comp ex fuel came in at 2.6%.

In-store comps were down low single digits, and that will get written up as store weakness by people not looking at where the pressure sits. Pharmacy sells in stores. eCommerce is now over 23% of the Walmart U.S. mix, double the level of five years ago, and stores remain the last-mile node for 80% of eCommerce orders and 100% of fast deliveries, so the units move through the same buildings and get counted in a different column.

Guidance went up on all three lines, sales to 4% to 5%, operating income to 7% to 8.5%, EPS to $2.80 to $2.87. Rainey called the raise deliberately modest and set it against more than $2B of unplanned fuel cost and what he called an arguably softer consumer environment than the one Walmart forecast against in February.

Walmart is raising its numbers into a weaker consumer on the strength of money it will not get again. The price investment only pays if the share gains outlast the refund, and there is no clean read on that until the refund is fully spent and Q4 lands.

Dick's closed 104 company-owned Foot Locker stores in the first half of fiscal 2026, eleven months after paying $2.5B for the chain. Warehouse Shoe Sale (WSS) went from 143 doors to 99. Charges against the acquisition now total $515.8M, and the company expects up to $750M before it finishes.

Most coverage will lead with the 3.6% proforma comp decline. The closures are the more durable signal, because a comp reflects one quarter and a shuttered lease reflects a view of the next ten years.

Ed Stack pointed to fewer sneaker launches and retro product that sold below expectations. Partly true, and entirely outside Dick's control, which is what makes it a comfortable explanation. Nike sets that calendar.

The core business held up. Dick's comped 4.9% and delivered $485M in segment profit while Foot Locker lost $31.9M for the quarter. Consolidated operating margin dropped from 12.4% to 7.9%, though the prior year figure is Dick's standalone and the comparison flatters nobody.

Foot Locker guidance for the full year is now negative 2% to flat, with a segment loss of $40 to $80M. Foot Locker enters reported comps in Q4, at which point the proforma framing goes away.