Walmart revenue dips as Americans tighten spending
Al Jazeera Staff
Walmart reported its slowest US same-store sales growth in six years, up just 2.6% in Q2, as consumers cut back due to high gasoline prices and inflation. The company is cutting prices on thousands of items, partly funded by a $2.9 billion tariff refund, but expects short-term pressure.
Walmart's sales are slowing as US consumer spending weakens, impacted by tariffs and tensions with Iran that have made shoppers more cautious, according to the retailer's latest financial report.
US same-store sales in the second quarter rose just 2.6%, below the 3.8% forecast by analysts at LSEG. This marks the slowest quarterly growth in six years for the Bentonville, Arkansas-based company.
The company cited rising gasoline prices as a key reason consumers are limiting purchases. "When gas prices rise above $4 a gallon, it can have a psychological impact... consumers are having to deliberate and make trade-offs," Chief Financial Officer John David Rainey said on a call with analysts on Thursday.
The average US gasoline price climbed to $4.10 per gallon (3.78 liters) on Thursday, up from $4.07 a week earlier, according to the American Automobile Association. That compares with $2.98 when the US and Israel began strikes against Iran.
Walmart said fuel-related costs are expected to add $2 billion more than its original forecast. Sales at Walmart's US pharmacies also declined. Overall, total quarterly revenue rose 3.4%, the weakest since the first quarter of fiscal 2023.
Shoppers spent 1.1% more at the checkout than the previous quarter, but that is well below the 3.1% increase a year earlier. Consumer inflation rose 0.1% month-over-month and 3.4% year-over-year, according to the US Bureau of Labor Statistics. Fresh fruit prices rose 2.2%, butter 0.8%, and fresh fish 1% from the prior month.
Meanwhile, total US retail sales in July fell 0.6%, the largest drop since May 2025, according to Commerce Department data. In response, Walmart announced on Wednesday price cuts on 11,000 items, partly supported by a $2.9 billion tariff refund it received—an unusual windfall—a strategy also adopted by rivals like Target.
However, Walmart said the price cuts took effect in July, so the impact will be more visible in the next report. "We don't necessarily expect that benefit to immediately offset the price reductions in the short term," Rainey said.
Foot traffic at traditional stores rose 1.5% in the quarter, down from 3% in the prior quarter. Conversely, Walmart's US e-commerce sales jumped 24%. Still, the company raised its net sales growth forecast from 3.5–4.5% to 4–5%.
"The core of the business remains in-store shopping," Jacob Aiken-Phillips, an analyst at Melius Research, told Reuters.
Mixed picture among major retailers
Other major retailers also posted results with slowing consumer spending as a common theme. TJX, parent of TJ Maxx and Marshalls, saw sales rise 1%, much slower than the 6% in the previous quarter. "We're concerned this relates to a decline in basket value due to weaker consumers and price increases over the past year and a half," Dylan Carden, an analyst at William Blair, told Reuters.
Target, Walmart's closest competitor, reported net revenue up 5.3% year-over-year to $26.5 billion, helped by a 3.6% rise in store traffic. It has cut prices on more than 10,000 items over the past year and received $1 billion in tariff refunds. In the stock market, Walmart shares fell 9.6% from the open on the day of the report. TJX shares dropped 1.7%, and Target fell 0.1%.
