Walmart Sales Growth Slows to a Six Year Low as Tariff Refunds Fund Price Cuts
Walmart delivered mixed results on August 20 2026 when it reported second quarter figures for the period ended July 31. Total revenue rose 5.9 percent to 187.9 billion dollars, or 5.1 percent in constant currency after a 1.5 billion dollar currency effect. Adjusted earnings per share came in at 0.81 dollars, above the 0.74 dollar consensus, and the company raised its full year sales and profit outlook. Investors focused instead on slower store growth in the United States and sent the shares down as much as 10 percent to a nine month low near 102.85 dollars, with the stock closing around 103.84 dollars, a drop of about 9 percent.
United States comparable sales excluding fuel grew 2.6 percent. That was the weakest quarterly pace since the fourth quarter of 2020, when growth was 1.9 percent, and it missed estimates that clustered near 3.5 percent to 3.7 percent. A year earlier the same measure had risen 4.6 percent. Transactions increased 1.5 percent while average spending per visit rose only 1.1 percent, down from 3.1 percent a year ago. Pharmacy pricing tied to federal Medicare negotiations subtracted about 0.8 percentage points from comparable sales. Without that effect, growth would have been 3.4 percent, still below expectations.
Higher gasoline prices weighed on shoppers. Chief Financial Officer John David Rainey said customers began making trade offs when fuel moved above 4 dollars a gallon. The company expects more than 2 billion dollars of extra fuel related costs this year across distribution and fulfillment. Even so, higher income households earning 100000 dollars or more kept spending on groceries, toys, fashion and private brands. Online sales remained a bright spot. Global ecommerce rose 23 percent, with United States online sales up 24 percent. Store fulfilled delivery grew 40 percent and marketplace net sales more than 50 percent. Advertising revenue increased 38 percent and membership fee revenue rose 17 percent. International net sales grew 7.9 percent in constant currency, led by China and India. Sams Club comparable sales rose 4.4 percent excluding fuel.
The most closely watched number was the tariff refund. Walmart said it was eligible for about 2.9 billion dollars in refunds after earlier emergency tariffs were struck down in court, equal to roughly half a percent of annual United States net sales. By the end of the quarter it had received substantially all of that amount, with less than 100 million dollars still outstanding according to Rainey. Management said the money would be used to lower prices rather than held as profit. The United States team delivered more than 11000 price rollbacks in the quarter, up from about 7200 at the end of the first quarter, including items such as beef where shoppers felt pressure.
Those refunds lifted second quarter profits. Gross profit rate rose 96 basis points. Operating income increased 28.8 percent to about 9.4 billion dollars. Adjusted operating income in constant currency grew about 17 percent and included a net benefit of roughly 750 basis points from the refunds, partly offset by price cuts and higher fuel costs. Excluding that benefit, underlying operating income growth sat at the top of the company’s earlier 7 to 10 percent range. Unadjusted net income was 6.366 billion dollars, down 9.4 percent from 7.026 billion dollars a year earlier.
Because much of the pricing action came late in the quarter, executives asked investors to read the second and third quarters together. For the third quarter Walmart guided net sales growth of 3.0 percent to 3.75 percent and adjusted operating income growth of 2.0 percent to 4.0 percent, below some analyst forecasts. It also noted a timing shift of Flipkarts Big Billion Days that would subtract more than 100 basis points from third quarter growth. For the full fiscal year the company raised its constant currency net sales outlook to 4.0 percent to 5.0 percent from 3.5 percent to 4.5 percent, and adjusted operating income growth to 7.0 percent to 8.5 percent from 6.0 percent to 8.0 percent. Adjusted earnings per share are now expected at 2.80 to 2.87 dollars, up from 2.75 to 2.85 dollars.
Walmart President and Chief Executive Officer John Furner said the company is investing in price because customers need it and because lower prices can support share over time. Rainey said the business model is becoming more durable and that remaining refunds will continue to go into customer experience and price in the second half. The August 20 report therefore left two stories side by side. On one side stood slower comparable sales, squeezed tickets and a sharp share price drop. On the other stood a one time 2.9 billion dollar refund, thousands of rollbacks, and a higher full year forecast built on the bet that lower prices will bring shoppers back.
