Walmart Raises Full-Year Outlook, Plans $2.9B Tariff Refund for Price Cuts
Key Points
- Walmart raised full-year net sales guidance to 4-5% from prior 3.5-4.5% on Thursday, citing strong e-commerce growth of 23% globally.
- CFO John David Rainey said the retailer is eligible for $2.9 billion in tariff refunds and plans to deploy those funds for price reductions in Q3.
- U.S. comparable sales grew 2.6% in fiscal Q2 ending July 31, though premarket shares fell 5% following the earnings announcement.
Retail Growth Fueled by E-Commerce and Advertising
Walmart's second-quarter results were driven by strong performance in digital channels and new revenue streams. E-commerce sales jumped 23% globally, while U.S. comparable sales grew 2.6%, offset in part by a 0.8% headwind in its health and wellness business as price caps on certain drugs took effect. Global advertising revenue climbed 38%, and Walmart+ membership fee revenue jumped 17%, with net adds hitting a high for a second quarter.
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Sam's Club U.S. delivered net sales of $25.7 billion for the quarter, up 8.8% from the previous year, as membership fees climbed 6%. U.S. net sales overall reached $125.2 billion compared to $120.9 billion the year prior, while international net sales grew to $35.2 billion from $31.2 billion.
The company raised its full-year adjusted earnings per share guidance to between $2.80 and $2.87, compared to prior guidance of $2.75 to $2.85. For the third quarter, Walmart expects net sales to increase between 3% and 3.75% and adjusted earnings per share between 62 cents and 64 cents. Rainey told CNBC that Walmart continues to see consumers stretched thin, particularly with higher gas prices, and said the company is lowering prices across categories, including beef.
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Despite the raised outlook, Walmart shares sank roughly 5% in premarket trading Thursday. The stock decline occurred even as the retailer posted results that beat Wall Street estimates and extended its stretch of solid growth fueled by gains in pickup and delivery, its third-party marketplace, and advertising revenue. The company has gained market share with higher-income customers in recent years as it attempts to make shopping more convenient and adds perks to its Walmart+ membership program.
Walmart's decision to redirect tariff refunds directly to price cuts marks a departure from how retailers typically deploy windfall gains, which often flow to shareholder returns or operational investments. At the $2.9 billion scale, this commitment represents a material bet on consumer price sensitivity as inflation concerns persist—a strategy that echoes retailer moves during the 2008 financial crisis when major chains prioritized traffic over margin expansion. The third-quarter deployment will be the test of whether consumer spending rebounds under lower price pressure or whether structural budget constraints continue to limit overall sales velocity.
Market Outlook
Walmart's tariff refund deployment and raised guidance suggest confidence in sustained consumer demand despite cost headwinds. Analysts will monitor Q3 results closely to assess whether price reductions drive comparable-store sales growth above the 2.6% Q2 rate. The $2 billion fuel cost headwind and persistent consumer strain could moderate upside if refund benefits fail to offset structural purchasing weakness.
Sources: CNBC and other international news outlets.
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