Walmart misses quarterly sales estimates as petrol prices curb consumer spending

Sales performance and Wall Street estimates

Walmart reported a 2.6% increase in quarterly U.S. same-store sales on Thursday, falling short of Wall Street estimates of 3.8% compiled by LSEG. The performance represents the retailer's slowest quarterly comparable sales increase in six years, prompting premarket share declines between 4% and 6%. Overall quarterly revenue expanded 3.4%, matching the slowest growth rate recorded by the company since the first quarter of fiscal 2023. Average spending per customer transaction rose 1.1%, moderating from the 3.1% pace recorded during the same period a year earlier. Company leadership noted that customers are focusing budgets on essentials and groceries while curbing discretionary purchases ahead of the back-to-school and holiday shopping periods.

For the consumer economy, this is like Nvidia posting a slowdown. Walmart has been winning the trade-down trade, but that tailwind may be fading.

Inflation and petrol price pressure

Rising energy prices contributed to the pullback in customer spending, according to executive remarks during the earnings conference call. Data from the American Automobile Association showed average U.S. petrol prices reaching $4.10 per gallon on Thursday, climbing from $4.07 the previous week and $2.98 recorded when military strikes involving the United States, Israel, and Iran occurred. The retailer expects to incur $2 billion in fuel-related transportation expenses above its earlier annual guidance. Wider macroeconomic data showed U.S. retail sales fell 0.6% in July, marking the largest monthly drop since May 2025. Consumer price index data from the U.S. Bureau of Labor Statistics indicated overall inflation rose 0.1% month-over-month and 3.4% year-over-year, with fresh fruit prices rising 2.2%, fresh fish gaining 1.0%, and butter climbing 0.8%.

When fuel prices increase and get above $4, perhaps there's a psychological impact to that... consumers are making trade-offs.

Policy impacts and pharmacy revenue

Walmart's pharmacy business experienced reduced dollar sales following federal price negotiations under the Inflation Reduction Act. Price caps established through the Maximum Fair Price program for high-cost Medicare prescription medications lowered spending per customer on each pharmacy visit. Excluding the wellness division, Walmart stated that core U.S. comparable store sales grew 3.4% during the second quarter. Merchandising categories displayed contrasting trends, with grocery registering mid-single-digit sales growth while general merchandise, including apparel and toys, recorded low-single-digit gains. To retain price-sensitive shoppers, the company implemented price cuts on more than 7,000 items this year and announced reductions across 11,000 products on Wednesday, supported in part by $2.9 billion received in tariff refunds.

Digital growth and updated annual outlook

Digital channels and auxiliary revenue units sustained company operating margins despite slower store transaction growth. U.S. e-commerce sales expanded 24% year-over-year, moderating from the 26% growth recorded in the first quarter. Walmart Connect, the retailer's U.S. advertising business, expanded 43% during the quarter, while the third-party online marketplace continued to grow. Tariff refunds contributed a 750-basis-point benefit to adjusted operating income, providing capital to fund retail price reductions that took effect in July. Chief Executive Officer John Furner slightly raised the full-year fiscal 2027 net sales growth forecast to a range between 4% and 5%, up from the previous projection of 3.5% to 4.5%.