Walmart’s sales growth falls to 6-year low as Middle American shoppers go on strike

Walmart reported a 6-year low in U.S. comparable sales growth during its latest quarter, prompting a cautious outlook for the year and a 6% drop in company shares before trading opened. Comparable sales in U.S. stores, which include online sales, rose 2.6% in the second quarter, slightly below the 4.1% increase in the previous quarter.

The slowdown was attributed to federal legislation that caps the price of certain high-cost Medicare drugs at pharmacies, forcing a decrease in sales. This was below analysts' projected growth of 3.8%, according to FactSet. Walmart's e-commerce business, which has been a key growth driver, expanded by 24% in the quarter, slightly slower than the 26% pace from the previous quarter.

As one of the first major retailers to release second-quarter results, Walmart's performance could provide insights into whether ongoing price pressures from the Iran conflict have affected consumer behavior. With over 150 million weekly customers, the retailer is gaining attention after retail sales data showed a weak performance in July and growing economic pessimism.

Walmart revealed the smallest gain in comparable store sales since January 2020, at a 1.9% increase. The company's market share gains are primarily from households earning over $100,000 annually. Walmart's third-quarter net income was $6.37 billion, or 80 cents per share, surpassing expectations of 74 cents. For the full year, the company projects earnings per share between $2.80 and $2.87, with sales growth expected to be 4% to 5%, below analysts' predictions of $2.90 per share and $752.06 billion in sales.