Key facts
- Walmart's U.S. comparable sales grew 2.6% in Q2, excluding fuel, the slowest in six years.
- Average spending per transaction growth slowed to 1.1%.
- The company beat Q2 earnings expectations and raised full-year guidance.
- Walmart's stock fell over 8% following the report.
- Profit was boosted by a $2.9 billion tariff refund, with $2 billion in additional fuel costs anticipated.
- Domestic e-commerce business grew 24%.
Walmart reported its slowest U.S. comparable sales growth in six years, with a 2.6% increase excluding fuel costs, signaling increased consumer caution amid rising prices. Despite beating earnings expectations and raising full-year guidance, the retailer's stock fell over 8% as investors reacted to the slowdown and a cautious outlook.
The company's profit was boosted by a $2.9 billion tariff refund, which Walmart is using to temporarily lower prices on 11,000 items. However, Walmart anticipates an additional $2 billion in fuel costs this year. Federal legislation requiring pharmacies to dispense some high-cost Medicare drugs at capped prices also impacted comparable sales.
Walmart's domestic e-commerce business continues to be a growth engine, rising 24% and now representing 23% of the overall U.S. business. CEO John Furner noted that these scaling businesses are changing the shape of Walmart's operations.
Chief Financial Officer John David Rainey stated that gasoline prices above $4 have a psychological impact, leading consumers to make trade-offs. Walmart is capturing market share from wealthier consumers, with the biggest gains coming from households earning over $100,000 annually.
For the third quarter, Walmart expects earnings per share of 62 cents to 64 cents and sales growth of 3% to 3.75%. For the full year, the company projects earnings per share between $2.80 and $2.87, with sales up 4% to 5%.