Walmart posts slowest sales growth in six years as shoppers pull back on spending

Walmart, the country's largest retailer, reported its slowest quarterly sales growth in six years on Thursday, a result executives attributed to shoppers pulling back as gasoline prices climbed to their highest level in years and inflation ticked upward again. Shares of the company fell more than 9 percent, wiping out over $1 trillion in accumulated market value gains and knocking Walmart out of the small club of U.S. companies valued above $1 trillion.

The results, disclosed in Walmart's second-quarter earnings release, land at a moment when several strands of household budgeting data are pointing the same direction at once: a national average gasoline price hovering near $4.10 a gallon, a mortgage market still locked above 6.5 percent, and a Consumer Price Index that ticked back up to 3.4 percent in July. For a retailer that built its identity on being the low-price option for stretched budgets, a visible slowdown in its own comparable sales is one of the clearer real-time signals of how much room American households have left to spend.

Walmart operates more than 4,600 stores in the United States and serves an estimated 255 million customers a week worldwide, a footprint that makes its quarterly results one of the closest things to a live read on the health of the broader consumer economy. Because roughly two-thirds of its U.S. sales run through grocery, its comparable-sales figures are also, in effect, a proxy for how far a household's food and essentials budget is stretching. That is part of why a two-percentage-point miss against Wall Street's forecast drew as sharp a market reaction as it did: investors read it as evidence that the squeeze on household budgets has widened beyond the lower-income shoppers who are typically first to cut back.

The numbers

Walmart U.S. comparable sales, which exclude fuel, rose 2.6 percent in the quarter, well short of the 3.8 percent Wall Street had penciled in and the softest quarterly increase the company has posted in six years. Total company revenue climbed 5.9 percent, or 5.1 percent in constant currency, helped by global e-commerce sales that grew 23 percent and membership fee revenue that grew 17 percent. Operating income rose 28.8 percent, but a large share of that gain came from a one-time item: Walmart said it received approximately $2.9 billion in tariff refunds tied to the International Emergency Economic Powers Act, a benefit that alone accounted for roughly 750 basis points of the company's adjusted operating income growth for the quarter.

Set against that refund was a cost the company had not fully anticipated: more than $2 billion in incremental expenses tied to higher fuel prices, above what Walmart had built into its original guidance for the year. Foot traffic in stores rose just 1.5 percent, down from roughly 3 percent growth in the prior quarter, and average spending per shopping trip grew only 1.1 percent, versus 3.1 percent a year earlier, according to figures reported alongside the earnings.

A gasoline squeeze shows up at the register

The company's own account of the quarter points squarely at fuel costs. The national average price of regular gasoline has risen from about $2.98 a gallon earlier this year to roughly $4.10, according to data published by AAA, which tracks the national average daily. The motor club's tracking shows August 2026 running as the most expensive August on record for gasoline, with a monthly average of $4.06 a gallon, edging past the previous high of $3.97 set in August 2022. Separate weekly survey data from the U.S. Energy Information Administration put the national average at $4.049 a gallon for the week ending August 17, corroborating the trend using an independent government sampling method. AAA has attributed the run-up largely to crude oil prices holding near $80 a barrel amid instability around the Strait of Hormuz, even as gasoline demand has been soft for the season.

"As fuel prices increased above $4, there's a psychological impact to that, that there are choices that consumers are making," Walmart chief financial officer John David Rainey said.

Walmart chief executive John Furner offered a similar read on the state of household budgets. "Customers tell us they're still feeling some pressure," Furner said. "Having the best prices across a basket of goods helps us continue to build trust." The company said it has deployed more than 11,000 price rollbacks this year, partly funded by the tariff refund, in an effort to hold on to price-sensitive shoppers.

Who is feeling it

The pressure is not evenly distributed. Walmart executives and outside analysts have described a widening gap between higher- and lower-income shoppers, with even wealthier households increasingly trading down to Walmart's private-label goods and lower-priced items, according to commentary reported by NBC News. That dynamic has kept overall traffic positive even as spending per trip cools. A separate drag came from the health and wellness category, which subtracted roughly 80 basis points from comparable sales after federal rules lowered Medicare medication prices, denting pharmacy revenue that had been a steady growth driver in recent years.

Broader government data tell a consistent story about household spending pulling back over the summer: Census Bureau retail sales figures showed overall retail sales slipping in July, and the July inflation reading of 3.4 percent, up from 3.5 percent in June by one measure but still elevated versus earlier in the year, has left less room in household budgets already strained by gas prices. Coverage from Al Jazeera described consumers as navigating a "double whammy" of tariff-driven price increases layered on top of the fuel spike.

Housing costs are compounding the squeeze for many of the same households. The 30-year fixed mortgage rate has held near 6.65 percent for weeks, according to Freddie Mac's survey, keeping monthly payments elevated for anyone buying or refinancing and leaving renters facing landlords who are themselves absorbing higher costs. For households that are not in the market for a home at all, the more immediate pressure remains at the pump and the checkout line, but economists who track consumer spending say the combination of several simultaneous cost pressures, rather than any single one, is what tends to show up first in discretionary categories such as general merchandise, apparel and electronics — all areas where Walmart and other big-box retailers have reported softer demand this year.

Not every retailer felt the same drag

The picture was not uniformly weak across retail. Target, which reports on a different quarterly calendar, posted net sales of $26.5 billion for its most recent quarter, up 5.3 percent from a year earlier, and raised its full-year sales growth outlook to around 4 percent from a previous forecast of roughly 2 percent. The contrast suggests some of Walmart's softness may reflect company-specific factors, including the pharmacy headwind, alongside the broader spending pullback tied to gas prices and inflation that appears to be weighing on shoppers across income levels, according to reporting from the Detroit News.

• Walmart U.S. comparable sales: +2.6 percent, versus a forecast of +3.8 percent
• Tariff refunds received: approximately $2.9 billion
• Incremental fuel-cost headwind: more than $2 billion, above original guidance
• National average gasoline price: roughly $4.10 a gallon, up from about $2.98 earlier this year

What happens next

Walmart raised its full-year sales and operating income guidance despite the quarter's shortfall, betting that price rollbacks and continued e-commerce growth can offset softer in-store spending. Executives said on the earnings call that third-quarter net sales are expected to grow 3.0 to 3.75 percent, a more cautious range than the growth the company delivered over the past year, suggesting management does not expect the pressure on shoppers to ease quickly. The company's next major test comes when the Bureau of Labor Statistics releases August inflation data in September, and when gasoline prices either ease or continue climbing into the fall.

For now, mortgage rates near 6.65 percent, according to Freddie Mac's weekly mortgage market survey, are adding a separate layer of financial pressure on households already absorbing higher costs at the pump and the grocery store. Retailers up and down the price spectrum are now watching the same set of indicators — gasoline prices, mortgage rates and the next Consumer Price Index reading — to gauge whether this summer's pullback in spending is a temporary reaction to a fuel-price spike or the start of a longer stretch of caution heading into the holiday shopping season.