August 21 – Walmart, the world’s largest retailer, has raised its annual sales and profit forecast after experiencing strong customer demand across all income brackets. As rising living costs weigh on American households, the retailer’s strategy of keeping prices low has helped it attract a broader base of shoppers. Despite the upbeat outlook, Walmart’s shares slipped in early trading after its second-quarter profit came in lower than Wall Street expected, marking its first earnings miss in over three years.
The company reported second-quarter revenue of $177.4 billion, exceeding analyst expectations, aided by strong store traffic and surging online sales. Global e-commerce sales jumped 25% during the quarter, supported by faster delivery services and an expansion of store-based fulfillment. Walmart said one-third of its online orders were delivered in three hours or less, underscoring its growing digital capabilities.
Profit Miss and Tariff Pressures
Although Walmart (WMT.N) maintained strong sales growth, its adjusted earnings per share came in at 68 cents, falling short of the 74 cents that analysts had expected. The disappointment led to a 5% drop in the retailer’s stock price, a reflection of investor concern despite the company’s solid revenue performance.
Executives acknowledged that tariffs have begun to add pressure on costs, especially as Walmart replenishes inventory at post-tariff price levels. Chief Executive Officer Doug McMillon explained that the increases have been gradual, preventing any sudden shifts in consumer behavior. However, he warned that costs are rising each week and will likely continue to climb during the second half of the year.
“Customers are adjusting to higher prices in ways that are noticeable,” McMillon said during an analyst call. “Middle- and lower-income households are scaling back by putting fewer items in their baskets or turning to private-label products, while higher-income households remain relatively unaffected.”
The impact of tariffs has not yet caused a significant spike in consumer-level inflation, but wholesale price growth accelerated in July at its fastest pace in more than three years. Retailers across the industry, from apparel to packaged goods, have issued warnings about cost increases. Walmart itself had signaled earlier in the summer that some price adjustments would be necessary, a move that sparked criticism from policymakers.
Despite the earnings miss, Walmart’s Chief Financial Officer John David Rainey emphasized that margins are likely to face less pressure than previously feared in the current quarter. He pointed out that uncertainties in trade policy, fluctuating demand, and the need for flexibility continue to shape the company’s financial planning.
Strong Sales Performance and Upbeat Forecast
Walmart’s domestic operations delivered robust results, with U.S. comparable sales rising 4.6% during the second quarter, ahead of analyst forecasts of 3.8%. Growth was fueled by demand for grocery staples such as fresh food, dairy products, and pantry essentials, as well as over-the-counter medicines. The retailer’s strategy of offering “rollbacks,” or temporary price cuts, drew significant customer attention. During the quarter, Walmart offered more than 7,400 price rollbacks, with grocery items seeing a 30% increase in discounts compared to the same period last year.
Average spending per customer visit increased by 3.1%, a significant rise compared to 0.6% growth a year ago. However, foot traffic growth slowed to 1.5%, down from 3.6% during the same period last year. Still, marketplace sales, which include categories such as electronics, toys, automotive, and gaming, surged 40%, highlighting consumer interest in discretionary items.
Walmart’s digital strategy continues to pay dividends. Its ability to blend online shopping with in-store pickup and same-day delivery has provided an edge over competitors. With consumers increasingly seeking convenience, Walmart’s investment in technology and fulfillment speed has become a key driver of its growth.
For the full year, Walmart anticipates sales growth in the range of 3.75% to 4.75%, slightly above its prior outlook, which had called for an increase of 3% to 4%. Adjusted earnings per share are forecast between $2.52 and $2.62, compared to the previous range of $2.50 to $2.60. For the third quarter, Walmart anticipates net sales growth in the same 3.75% to 4.75% range, excluding currency fluctuations.
Retail experts note that Walmart’s appeal lies in its ability to deliver value at a time when consumers are keen to stretch their budgets. Neil Saunders, managing director at retail consultancy GlobalData, commented that the company’s value proposition continues to resonate with shoppers across the income spectrum. “Consumers are focused on getting the most out of every dollar they spend, and Walmart is well-positioned to meet that need,” he said.
Rival Target recently issued its own warning about tariff-related pressures, though it signaled that raising prices would only come as a last resort. Because nearly two-thirds of the goods Walmart offers in the United States come from domestic suppliers, the company is somewhat shielded from the full impact of tariffs, but executives acknowledge the challenge of balancing affordability with rising supply chain costs.
In the end, Walmart’s second-quarter results highlight a mixed picture: strong revenue growth and digital momentum, tempered by cost challenges and an earnings miss. Yet the company’s raised full-year outlook signals confidence in its ability to sustain demand, even as inflationary pressures persist. For shoppers, Walmart’s focus on affordability continues to be a compelling draw, and for investors, the retailer’s ability to balance growth with profitability will remain the key question in the months ahead.