That’s all positive. The problem was Walmart’s U.S. same-store sales growth, a key metric for retailers, missed expectations. Excluding fuel, sales grew just 2.6%, marking the company’s lowest period of growth since early 2020, when much of the country was in lockdown due to the pandemic.
Why one number rattled Wall Street
Since Walmart has a broad customer base, investors use its U.S. store sales as an indicator for household spending. Chief financial officer John David Rainey told analysts the company is looking at “arguably a softer consumer environment than in February,” when it set initial forecasts for the year.
Rising gas prices help explain the reluctance on the part of shoppers to spend big. The average price of gas currently costs $4.10 per gallon nationwide, according to AAA, up from $2.98 per gallon before the Iran war began.
Rainey said the shift was visible almost month by month, with June “a little more obvious” as shoppers grew choosier about what went in their carts. On top of that, the cost of most goods and services remains elevated, with inflation currently at 3.4%.
To be fair, Walmart’s sluggish in-store sales growth can also be attributed to its shrinking pharmacy revenue, as the Trump Administration looks to lower the cost of prescription drugs, especially GLP-1 drugs. Last month, prescription drug prices fell 0.8% and are down 3.1% from a year ago, according to BLS data cited by Axios. Drug prices also haven’t risen in any month so far this year.
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Where the $2.9 billion tariff refund is going
On the tariff front, Walmart executives told investors it’s eligible for roughly $2.9 billion in tariff refunds. In fact, Rainey said on the earnings call that Walmart has already received “substantially all” of that money back, which he pegged at about 0.5% of the company’s annual U.S. sales. Target reported $994 million a day earlier. TJX, the owner of TJ Maxx and Marshalls, got $331 million.
Plenty of investors assumed that money would be used to boost profit margins. Instead, Walmart cut prices on more than 11,000 items in the quarter — what it calls rollbacks — to help customers feeling the pimch. CEO John Furner told analysts the cuts showed up in food, general merchandise, consumables and fashion.
