Walmart lifted its fiscal 2027 outlook after receiving nearly all of an expected $2.9 billion in tariff refunds, even as U.S. comparable sales posted their weakest quarterly growth since the COVID-19 pandemic.
By yourNEWS Media Newsroom
Walmart raised its full-year sales and earnings outlook Thursday as billions of dollars in tariff refunds helped offset slowing growth in its core U.S. retail business, where comparable sales increased at their weakest pace since the pandemic.
The world’s largest retailer reported second-quarter fiscal 2027 revenue of $187.9 billion, an increase of 5.9% from a year earlier for the three months ended July 31.
Net income declined, however, falling to $6.37 billion from $7.03 billion in the same period a year earlier.
Walmart’s digital operations remained one of the company’s strongest areas of growth. U.S. e-commerce sales increased 24% during the quarter, while Walmart Connect, its advertising business, posted a 43% increase.
The company’s closely watched U.S. comparable-sales figure told a more subdued story.
Comparable sales, which measure performance at stores and digital channels operating for at least 12 months, rose 2.6% excluding fuel. Wall Street analysts had expected growth in the high-3% range.
The 2.6% gain represented Walmart’s smallest quarterly comparable-sales increase since the COVID-19 pandemic.
Walmart attributed part of the slowdown to federal drug-price negotiations under the Inflation Reduction Act, which reduced spending in its health and wellness business.
Without that effect, the company said comparable sales would have increased 3.4%. Even that adjusted figure would have fallen short of Wall Street expectations.
Consumers also spent only modestly more on each shopping trip.
Average spending per transaction rose 1.1% from the previous year, substantially below the 3.1% increase recorded during the comparable quarter a year earlier.
Despite those signs of deceleration, Walmart increased its expectations for the remainder of the fiscal year.
The company now projects third-quarter net sales growth of between 3% and 3.75%.
For the full year, Walmart expects net sales to increase between 4% and 5%, up from its previous forecast calling for growth of 3.5% to 4.5%.
The company also raised its adjusted earnings guidance to between $2.80 and $2.87 per share. Its previous forecast ranged from $2.75 to $2.85 per share.
A major factor supporting the improved outlook is the recovery of money Walmart had paid in tariffs.
The retailer said it has now received nearly all of the $2.9 billion in tariff refunds it expected.
Walmart said those savings are being reinvested into lower prices, particularly across grocery and general merchandise, which account for most of the company’s retail sales.
Chief Financial Officer John David Rainey cautioned that shoppers should not necessarily expect the financial benefit from those refunds to immediately translate into visible price reductions throughout stores.
“You don’t necessarily expect to have that offsetting benefit to the lower prices in the immediate period,” Rainey said during the company’s Thursday earnings call.
Investors reacted negatively to the quarterly results despite the higher annual forecast.
Walmart shares fell more than 8% in early trading Thursday, with the weaker-than-expected comparable-sales figure appearing to overshadow the improved guidance.
The market reaction was particularly notable because Walmart has established a pattern in recent years of exceeding analysts’ comparable-sales forecasts by comfortable margins.
The company’s results also point to continued caution among American consumers as households contend with lingering inflation and elevated gasoline prices.
Walmart executives said higher fuel costs are influencing how customers allocate their money.
The retailer now expects elevated gasoline prices to create approximately $2 billion in additional fuel-related costs compared with assumptions included in its original financial guidance.
Rainey said Walmart could see changes in customer purchasing behavior when gasoline crossed certain price levels during the quarter.
“As you go through month by month in the last quarter, you can tell when fuel prices increased and got above $4, perhaps there’s a psychological impact on the choices consumers are making,” Rainey said.
“Customers are making tradeoffs. That’s why we lean so heavily into lower prices.”
Walmart said it responded by cutting prices on approximately 11,000 products during the quarter.
That figure was up substantially from the 7,200 items carrying price reductions at the end of the company’s first quarter.
The results suggest Walmart is attempting to preserve its value-oriented position as shoppers become more selective about where and how they spend their money.
The retailer’s performance comes amid mixed results across the broader U.S. retail industry.
Target reported a 3.8% increase in quarterly comparable sales, reversing declines recorded a year earlier.
TJX Companies, the parent company of T.J. Maxx and Marshalls, reported comparable-sales growth of 4%, although comparable sales at its primary U.S. division increased only 1%.
Home improvement retailers reported considerably weaker growth.
Home Depot’s comparable sales increased 1.7%, while Lowe’s posted growth of just 0.2%.
Walmart’s quarter reflected a similar combination of resilience and consumer restraint. Overall revenue and online sales continued to expand, but the slowdown in comparable sales and spending per transaction showed that shoppers are becoming more cautious.
The company’s higher forecast now rests partly on the financial benefit from its $2.9 billion in tariff refunds, continued strength in e-commerce and advertising, and efforts to use lower prices to hold onto consumers who are making increasingly deliberate spending choices.
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