Walmart is making it clear that its growth no longer depends solely on selling products in physical stores. Its fiscal first-quarter 2027 financial results show a company accelerating its transformation toward a more profitable retail model supported by advertising, memberships, marketplace, eCommerce, artificial intelligence, fulfillment and fast delivery.
The company reported revenue of $177.8 billion, an increase of 7.3%, or 5.9% in constant currency. Global eCommerce advanced 26%, global advertising grew 37%, membership revenue increased 17.4% and operating income rose 5.0%, despite pressure from higher fuel costs in distribution and fulfillment.
Why does Walmart no longer sell only products?
The new Walmart sells products, but it also sells audiences, memberships, logistics services, data, advertising space and access to its omnichannel ecosystem. This is a key difference compared with traditional retail: the company wants every purchase to activate additional revenue streams around the consumer.
John Furner, president and CEO of Walmart, said in the report that the results reflect the company’s focus on better shopping experiences, a broader assortment, faster delivery, innovative technologies, automation and “higher-margin commerce solutions.”
The phrase summarizes Walmart’s new strategy: using its scale in the United States and other markets to turn stores, clubs, apps and its marketplace into a commercial platform with additional revenue streams.
Which businesses are increasing Walmart’s margins?
The most relevant businesses in this new stage are advertising, memberships and marketplace. The company defines them as “commerce solutions,” areas that complement the retail business and contribute to a stronger profitability structure.
During the call with analysts, Walmart explained that it is strengthening its business mix by scaling higher-margin areas such as advertising, membership and marketplace. According to the company, these businesses are becoming more significant contributors to overall profitability and, together, accounted for approximately one-third of operating income.
That figure is important because it shows that Walmart is no longer competing only to sell more units. It is now also competing to capture more value from every visit, every search, every delivery, every membership and every third-party seller operating within its platform.
How did Walmart’s advertising business grow?
Advertising was one of the strongest growth engines during the quarter. Walmart reported that its global advertising business grew 37%, with strength across its segments. In Walmart U.S., advertising increased 36%, while Walmart Connect, excluding VIZIO, grew 44%.
This growth confirms the importance of retail media within the business. Walmart does not only use its platform to sell products; it also monetizes its purchasing data, digital traffic, marketplace and proximity to consumers at the moment they make a decision.
During the analyst call, the company explained that advertising growth at Walmart U.S. was driven by greater participation from marketplace sellers, who increased their advertising investment by more than 50% and saw a positive impact on sales. Walmart also highlighted new artificial intelligence tools designed to optimize campaigns and expand reach through VIZIO’s connected platform.
Why is the marketplace central to Walmart’s strategy?
The marketplace allows Walmart to expand its assortment without carrying all inventory on its balance sheet or relying exclusively on direct sales. In the United States, marketplace sales grew nearly 50% during the quarter, their best performance in 10 quarters, according to the financial presentation.
The company also said that marketplace growth in the United States was the strongest in two and a half years. In addition, Walmart is rolling out global marketplace capabilities outside the United States, including in Canada, as part of a strategy to learn from the North American model and scale it in other markets.
The economic impact is significant: more sellers mean a broader assortment, more visits, greater purchase frequency, higher fulfillment demand and more advertising revenue. As a result, the marketplace does not operate as an isolated business, but as a component that feeds other higher-margin business lines.
What role do memberships play at Walmart and Sam’s?
Memberships are another source of recurring revenue for Walmart. During the quarter, membership fee revenue grew 17.4% globally. In the United States, Walmart+ posted a record number of net additions for a first quarter, while Sam’s Club U.S. maintained growth in members, renewals and Plus users.
Walmart highlighted that Walmart+ members spend approximately four times more than non-members and make seven times more eCommerce visits per year. This figure explains why membership is more than a benefits program: it is a tool for increasing frequency, loyalty and profitability.
In the case of Sam’s, the business also showed strength. Sam’s Club U.S. reported net sales of $23.4 billion, an increase of 6.1%. Comparable sales excluding fuel advanced 3.9%, transactions grew 6.2% and eCommerce increased 23%. In addition, membership and other income grew 11%, supported by a 5.6% increase in membership fee revenue.
How does Walmart connect its physical network with its digital business?
Walmart’s advantage lies in the combination of its physical network and digital platform. The company has more than 10,900 stores and clubs across different markets and uses that infrastructure to accelerate deliveries, reduce costs and improve the customer experience.
During the earnings call, the company explained that its network of stores and clubs serves as physical infrastructure to deliver speed with an increasingly attractive cost structure. Walmart said that, as delivery economics improve, speed becomes a driver of operating leverage, not only a better experience for customers and members.
In the United States, sales fulfilled through store delivery have more than doubled over the past two years. During the quarter, more than 36% of those orders were delivered in less than three hours, and Walmart said it can reach approximately 60% of the U.S. population within 30 minutes or less.
What do Walmart U.S. results show?
Walmart U.S. remains at the center of the strategy. In the fiscal first quarter of 2027, the segment reported net sales of $117.2 billion, an increase of 4.5%. Comparable sales excluding fuel grew 4.1%, transactions increased 3.0% and the average ticket advanced 1.1%.
The company attributed growth to a combination of eCommerce, store-fulfilled delivery, advertising and marketplace. At Walmart U.S., eCommerce grew 26%, supported by strength in store-fulfilled delivery, advertising and marketplace. Gross profit improved by 29 basis points, supported by a better business and merchandise mix, although it was partially affected by higher fuel costs.
This progress shows that Walmart’s strategy in the United States is not limited to increasing sales, but also focuses on improving the quality of those sales through digital businesses and complementary revenue streams.
How do these areas help increase margins?
The traditional retail business usually operates with narrow margins, especially in high-turnover categories such as food and consumables. For that reason, growth in advertising, memberships, marketplace and fulfillment is strategic: these business lines can generate revenue with a different cost structure and, in some cases, higher profitability.
Walmart reported that its consolidated gross profit rate increased by 6 basis points to 24.3%, led by Walmart U.S. The company explained that the improvement reflected benefits from category mix and business mix, led by advertising, although it was partially offset by higher fuel costs in the supply chain.
At Walmart U.S., gross profit totaled $32.5 billion, an increase of 5.6%, with a rate of 27.8%, up 29 basis points from the previous year. The company linked this improvement to growth in digital advertising, a better category mix and stronger eCommerce economics.
Why is Sam’s important within the new Walmart?
Sam’s Club is important because it combines memberships, high-volume purchases, eCommerce, fast delivery and customer loyalty. In the United States, Sam’s Club did not only sell more; it also increased the relevance of its digital ecosystem.
The financial report shows that Sam’s Club U.S. recorded a 23% increase in eCommerce, with continued growth in pickup and delivery fulfilled from clubs. Scheduled delivery from clubs increased by more than 90% and accounted for nearly 50% of the format’s eCommerce growth.
Walmart also reported that Sam’s Club launched Dynamic Express Delivery, a service that allows members to receive products in less than one hour. The company linked these improvements to the membership value proposition and the membership fee increase that took effect on May 1.
What challenges does this strategy face?
Although the higher-margin model is advancing, Walmart still faces pressure. Operating income grew 5.0%, but it was affected by approximately 250 basis points due to higher fuel costs in distribution and fulfillment. The company also absorbed approximately $175 million in fuel costs above expectations.
Even so, the company reiterated its guidance for fiscal year 2027. For the second quarter, it expects net sales in constant currency to grow between 4.0% and 5.0%, operating income to increase between 7.0% and 10.0%, and adjusted EPS to range from $0.72 to $0.74. For the full year, it maintained its expectation for constant-currency sales growth of 3.5% to 4.5% and adjusted operating income growth of 6.0% to 8.0%.
What does this mean for the retail industry?
The main takeaway is that Walmart is using its scale to build a retail company with multiple layers of monetization. The physical store remains central, but it now functions as a point of sale, logistics center, data node, membership base and marketplace support hub.
This strategy also changes competition within the sector. Walmart no longer competes only against supermarkets, discount stores or warehouse clubs. It competes against digital platforms, retail media networks, marketplaces and delivery services. In this new landscape, its advantage lies in connecting physical and digital shopping with a massive network in the United States and international markets.
What is the key figure?
The key figure is that advertising, memberships and marketplace already represent a significant part of Walmart’s new model. The company said these profit streams accounted for approximately one-third of operating income, while global advertising grew 37%, global eCommerce advanced 26% and membership revenue increased 17.4%.
In other words, the new Walmart sells more than products. Its strategy combines low prices, physical stores, Sam’s Club, eCommerce, marketplace, advertising and memberships to increase margins and sustain growth in the United States and its international markets.
