CNBC's Courtney Reagan joins 'Money Movers' with the latest news on Walmart as the company raises its full-year guidance.

Walmart has raised its full-year sales and earnings outlook after reporting stronger-than-expected revenues, even as it faces rising tariff costs and a $450 million charge related to insurance, legal, and restructuring expenses. The company's operating income margin was negatively impacted by these charges, but without them, the margin would have been about 6%.

US same-store sales have grown for 45 consecutive quarters, with digital sales increasing by 26% and advertising revenue up 31%. Walmart has also seen continued resilience among consumers, including gains among higher-income shoppers, and noted particular strength in apparel and general merchandise. Despite these positive results, Walmart's shares experienced a decline.

Walmart raises full-year guidance

Let's get to some retail earnings this morning. Walmart did hike its sales and earnings outlook, even as it said that its tariff costs are rising and will continue to do so. Our Courtney Reagan has more on the quarter. Busy morning, Court. Yeah, hi, Carl. So Walmart earnings disappoint slightly, though, on stronger than expected revenues, also increasing its full year sales and earnings guidance. Now, there's nuance in the operating income this quarter. Looks funny when you think about what normal cadence is for Walmart here. It did come in at a negative 8%. Again, this is operating income margin. Walmart had $450 million of liabilities because of insurance, legal, and restructuring charges. So basically, it self-insures for costs and liabilities for things like worker compensation and other similar potential claims. So this was a 560 basis point hit to the operating income, worth $0.05 to $0.06 of earnings. Without it, operating income margin would have been about 6%. So Walmart's US same-store sales growth streak, that continues, 45 straight quarters of growth, with comps at 4.6%. Analytics looked for 4%. Grocery, health, and wellness leading the way. Inventory for the United States up, but just 2.2%. Digital sales grew 26% here domestically. Profitability in that segment doubled. Now, the retailer's first time posting profitability for the digital business was just last quarter, so it's already doubled. Advertising, up 31% in the US. Now, I spoke with Walmart CFO John David Rainey, who said, look, there's certainly areas where we have fully absorbed the impact of higher tariff costs, and then there's other areas where we've had to pass some of those costs along. At these tariff impact costs, our costs will continue to drift upwards. We try to be aggressive here on price, minimize the impact for consumers. We had 7,400 price rollbacks in the most recent quarter. That's an increase of 2,000 from the prior period. And then when it comes to consumer, Rainey told me, look, they continue to be very resilient. Private brand penetration in the US, pretty flat. They continue to be choiceful. They are looking for value. And then, of course, Rainey called out some new strength in general merchandise, particularly a few areas like apparel, fashion, that really shined for us. In fact, we saw an acceleration in that category as we went through the quarter, which suggests to me that maybe some of the share that Target has been giving up has been picked up by Walmart. Carl and Sarah? That's what I was gonna ask you, because, yeah, if you're seeing strength in apparel, first of all, that's a good sign on the consumer. Sure. And in general merchandise as well, good sign for the consumer. And they are clearly growing share. I do wonder where it's coming from, especially the high-income consumer share gains that they're seeing. Yeah, it is really fascinating that they've pulled in some of these higher-income consumers, and they've continued to keep them, which is really sort of interesting and speaks to everything that Walmart's trying to do with the flywheel. I mean, maybe there is value there when they go in and they go in for the groceries or maybe the convenience of the grocery pickup or delivery, but then also add an extra few items to their basket. Perhaps it is apparel and maybe other areas, but I think the discipline that Walmart has been able to really continue when it comes to running a business in the face of rising costs. And again, we went through sort of that insurance nuance, and I mean, look, it's a big retailer. $450 million is a lot, and the company is still saying, look, it's not an adjustment, it's the cost of doing business, and we're still going to increase our outlook going forward. So a lot of details here, but really a lot of interesting reads as well. Yeah, I mean, fundamentally strong, despite the share sell-off today, down four and a quarter percent. Courtney, thank you.

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