Walmart sees sales drop as US consumer spending retreats | Retail News
Walmart’s sales have declined as U.S. consumer spending slows, influenced by the economic effects of tariffs and ongoing geopolitical tensions, particularly concerning Iran, according to the retailer’s latest earnings report.
In its second-quarter earnings, released Thursday, Walmart reported a 2.6 percent increase in same-store sales, which fell short of analyst expectations of 3.8 percent as estimated by LSEG. This marks the slowest quarterly growth for Walmart in six years.
The company, headquartered in Bentonville, Arkansas, attributed the decrease in consumer spending to rising petrol prices, which have psychological effects on shoppers. Walmart Chief Financial Officer John David Rainey noted during a conference call with analysts that “when fuel prices increase and surpass $4, consumers are making trade-offs.”
As of Thursday, the average price for a gallon of petrol was $4.10, up from $4.07 the previous week, according to the American Automobile Association. For context, prices were about $2.98 when the U.S. and Israel first engaged with Iran.
Walmart also anticipates incurring an additional $2 billion in fuel-related costs, exceeding its earlier guidance.
Sales in Walmart’s U.S. pharmacy sector experienced a decline, contributing to an overall quarterly revenue increase of only 3.4 percent—the slowest growth rate since the first quarter of fiscal 2023. Although consumers spent 1.1 percent more at checkout compared to the previous quarter, this increase is significantly lower than the 3.1 percent rise observed at the same time last year.
Meanwhile, consumer inflation ticked upward by 0.1 percent from the previous month and 3.4 percent year-over-year, as reported by the U.S. Labor Department’s Bureau of Labor Statistics. Key grocery items, such as fresh fruit, butter, and fish, saw price increases of 2.2 percent, 0.8 percent, and 1 percent, respectively.
Additionally, the U.S. Commerce Department reported a 0.6 percent decline in overall retail sales for July, the largest drop since May 2025.
In response to market conditions, Walmart announced on Wednesday that it would reduce prices on 11,000 items, a strategy also adopted by competitors like Target. The price changes took effect in July; however, their impact is expected to be more evident in future earnings reports.
“You don’t necessarily expect to have that offsetting benefit to the lower prices in the immediate period,” Rainey explained.
Foot traffic to Walmart stores increased by only 1.5 percent during the quarter, a decline from the 3 percent growth seen in the previous quarter. Conversely, e-commerce sales surged by 24 percent, prompting Walmart to revise its net sales growth forecast from 3.5–4.5 percent to 4–5 percent, despite acknowledging that physical store sales remain vital to the company’s success.
“The bread and butter of the company is still in-store and in-person shopping,” said Jacob Aiken-Phillips, an analyst at Melius Research.
Other major retailers also reported earnings alongside Walmart, reflecting a general slowdown in consumer spending. TJX Companies, which owns TJ Maxx and Marshalls, announced a sales growth of 1 percent for the quarter, down from 6 percent the previous quarter. Analyst Dylan Carden from William Blair expressed concern that this slowdown indicates broader consumer weakness.
In contrast, Target reported a 5.3 percent increase in net sales, totaling $26.5 billion for the quarter. This growth was supported by a 3.6 percent rise in in-store traffic and a $1 billion tariff refund received by the company.
Following the earnings report, Walmart’s stock fell by 9.6 percent since the market opened, while shares of TJX and Target decreased by 1.7 percent and 0.1 percent, respectively.
