Walmart sales under strain as US shoppers pull back
High gas prices and weaker pharmacy sales pushed Walmart's growth to its slowest pace in six years
Walmart's sales in the US have slowed to their slowest pace in over six years, indicating that American shoppers are under financial pressure. The retail giant attributes this strain to the rising cost of fuel. Despite this, Walmart reported a 2.6% increase in sales at comparable stores, excluding fuel, between May and July. The company plans to use up to $3 billion in expected tariff refunds to reduce prices and encourage customer spending.
These refunds stem from duties paid by Walmart after President Trump implemented a series of tariffs on imported goods last year, which were later deemed unlawful.
Target, another major retailer, recently received $1 billion in rebates, boosting its profits. Walmart, being the largest retailer in the US, intends to continue its price-cutting program, which has been expanded recently. Walmart has implemented 11,000 price rollbacks across various categories to maintain customer interest. The company's CFO, John David Rainey, stated that these lower prices are already increasing transactions and unit sales, particularly in food and other essential items.
However, Rainey acknowledged that the retail environment remains uneven, and lower-income households, a significant part of Walmart's customer base, are feeling the financial strain. Rising fuel prices are leaving consumers with less disposable income, prompting them to limit their spending to essentials. In June, this impact became evident as lower-income customers reduced their spending and focused on basic necessities.
Walmart's results also revealed other potential risks that could impact the company's future. Much of the profit increase in the quarter was due to the one-time tariff refunds, which analysts believe will not occur to the same extent again. The price rollbacks may put pressure on the company's margins, and Walmart is also investing in automation, new warehouses, and technology upgrades. Rainey emphasized that Walmart hopes these price reductions could become permanent if they continue to resonate with consumers.
Analysts questioned whether Walmart's earnings could still grow despite the declining sales figures. Executives responded by pointing to other revenue streams, such as membership and advertising, as potential sources of continued growth.
Written by urgent.news from BBC Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
