Sales at Walmart’s U.S. stores rose nearly 5% in its most recent quarter, a better-than-expected result that suggests shoppers squeezed by inflation and wary of economic uncertainty continue to flock to the retailer for staples and other goods, the company said Thursday.
As the largest retailer in the United States, Walmart is considered a bellwether for how consumers are feeling about the economy. Recent results from rivals have been mixed, but Walmart’s earnings were relatively upbeat, showing sales “momentum,” according to CEO Doug McMillon.
The number of shoppers who visited Walmart was up 1.5% in the quarter ending in July from the year before, and the amount of time they spent per visit grew twice as fast. The company’s e-commerce sales jumped more than 25% over the previous year.
McMillon told analysts on a call that Walmart had not seen a broad-based pullback by consumers because of tariffs. However, middle- and lower-income households have switched to cheaper alternatives, especially for product categories in which prices have risen, he added.
Walmart’s costs have risen every week because of tariffs, a trend the company expects to persist the rest of the year, McMillon said.
The company’s shares fell nearly 5% in early trading Thursday, as its second-quarter operating income was lower than analysts had expected. The company cited higher expenses related to insurance claims as the main driver of the shortfall, but it expected these costs to moderate in the quarters to come.
Still, Walmart raised its full-year sales forecast and affirmed its guidance for operating profit growth.
The company’s latest quarter covered a period when U.S. tariffs on a wide range of imports added extra costs to retailers like Walmart. Many businesses have been able to absorb the added expenses, by adding to inventories before the tariffs took effect and reorganizing supply chains. But as time goes on, companies are under pressure to pass the cost of tariffs onto consumers through higher prices.
Executives at Walmart reaffirmed Thursday that the company would hold off on raising prices for as long as it could. They had previously warned that tariffs were likely to lead to higher prices for consumers eventually, which drew criticism from President Donald Trump, who publicly called on the retailer to “EAT THE TARIFFS.”
Other retailers that reported earnings this week discussed different approaches to dealing with tariffs. TJX, the parent company of TJ Maxx, Marshalls and HomeGoods, said Wednesday it had expanded its inventory 10% last quarter, suggesting that it had a stockpile of goods bought before the steepest tariffs took effect. And Home Depot said Tuesday tariffs could soon begin to affect its pricing strategy.
Target said Wednesday that its sales and profit fell last quarter, and because of uncertainty related to tariffs, it did not buy back any of its shares. It would raise prices “as a last resort,” its chief commercial officer told analysts. The company also named a new CEO in an attempt to break its sales slump.
The latest government data showed inflation picking up last month, particularly on items exposed to tariffs like furniture, appliances and footwear. Anticipating higher prices, many Americans raced to buy imported products earlier in the year. Price increases on regular purchases, like groceries, are expected to hit shoppers sooner.
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