Walmart announced its slowest U.S. comparable sales growth in more than six years, with a 2.6% increase in the most recent quarter. This figure was below analysts' estimates of a 3.8% gain and was partially affected by new pharmacy-pricing regulations. Without these regulations, comparable sales would have risen 3.4%. The company's stock responded negatively, falling over 6% in premarket trading and eventually closing about 9% lower, dropping out of the $1 trillion club.
The slower growth reflects a trend of consumers, particularly lower-income shoppers, spending cautiously amid higher gas prices and overall cost increases. Despite this, sales of groceries, toys, fashion, and private brands were strong, and Walmart reported gaining market share, especially among households earning $100,000 or more annually. Much of the growth was driven by a 24% increase in U.S. e-commerce sales, which includes its advertising revenue business.
Walmart received nearly $3 billion in tariff refunds and plans to use a significant portion of this windfall to implement price cuts, or "rollbacks," to help customers grappling with inflation. The company also anticipates incurring over $2 billion in additional costs this year due to higher fuel prices. Despite the soft sales growth, Walmart raised its full-year net sales and operating income estimates, expecting net sales to increase 4% to 5% and operating income to rise 7% to 8.5%.
For the most recent quarter, Walmart's net sales rose 5.9% to $186.1 billion (or $187.94 billion according to some reports), exceeding analyst expectations. However, net income fell 9.4% to $6.37 billion. Adjusted earnings per share were 81 cents, surpassing Wall Street's expectation of 74 cents. The company's cautious outlook for the third quarter and the full year, with sales forecasts below analyst expectations, contributed to the negative market reaction.
