⚠ The Prices Are Set in Washington NowHigh threat

Walmart (WMT) — threat to the moat

A government programme set a price, and the largest retailer on earth lost more than a point of comparable-sales growth.

On 1 January 2026 a new maximum fair price regulation took effect, and in the following two quarters it took approximately 125 basis points off Walmart U.S. comparable sales1.

What the pharmacy regulation cost, June 2026 quarter (bp of comp sales)-125bpWalmart U.S. drag-80bpCompany total drag+2.6%Comp sales reported~+3.9%Comp sales ex pharmacyA price was set elsewhere and Walmart's revenue fell; no shopper changed behaviour.
A government programme reduced the largest retailer on earth's comparable-sales growth by more than a percentage point, without any competitor taking a single customer.

Read what that means carefully. A government programme set the price of a class of drugs, and the effect on the largest retailer in the world was to deflate the growth of its entire American business by more than a full percentage point — not because Walmart lost customers, or lost share, or made a merchandising error, but because the same prescriptions now ring up for less.

Health and wellness is where Walmart's growth has been concentrated: $54,898 million to $69,547 million in two fiscal years2. It is also, now, the category in which Walmart has the least influence over its own revenue line. Negotiated prices, formulary decisions and reimbursement rates are set by parties that do not have to consider Walmart's opinion, and the programme's scope is legislated to widen over time.

There is a genuine offsetting argument. Lower drug prices increase volumes and bring customers into the store for a category Walmart is good at, and a pharmacy that remains busy still delivers the traffic the rest of the building depends on. Deflation in a category with thin margins is also a smaller profit event than a revenue event.

But the revenue event is what shows up in comparable sales, and comparable sales is what the market prices.

Hold on to the disclosed pharmacy headwind: approximately 125 basis points in the June 2026 quarter and 80 basis points on the company total3. Watch whether it annualises away in early 2027 or whether the next tranche of negotiated prices replaces it.

References
  1. ReportedOn 1 January 2026 a new maximum fair price regulation took effect, and in the following two quarters it took approximately 125 basis points off Walmart U.S. comparable sales.
    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 ↗
  2. ReportedHealth and wellness is where Walmart's growth has been concentrated: $54,898 million to $69,547 million in two fiscal years.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  3. ReportedHold on to the disclosed pharmacy headwind: approximately 125 basis points in the June 2026 quarter and 80 basis points on the company total.
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
Sources
Generated September 22, 2026