Walmart Reports Slowest Sales Growth In 6 Years

Walmart’s same-store sales growth wobbled out of last quarter with the power of the last remaining shopping cart during a Sunday afternoon grocery trip. US sales growth inched up just 2.6%, the company’s slowest growth in almost six years in what was otherwise a positive earnings report. With Walmart often seen as a bellwether for the broader US economy, economists are worrying if consumer spending might finally be starting to dwindle.

In response to the news, the retail giant’s stock dropped over 9% yesterday. Much of the blame was placed on Walmart’s health and wellness business, which suffered from new drug price caps, including on GLP-1s. But, even excluding those losses, sales growth clocked in at 3.4%, just shy of Wall Street’s expected 3.5%. Last year, same-store sales grew 4.6% during the same time.

So what’s going on?

• CFO John David Rainey told investors that the consumer environment has softened in the last quarter, pointing to gas prices jumping past $4 a gallon in July.
• Average hourly earnings have slowed, consumer sentiment sank this month, and folks’ personal savings rates are at their lowest levels since 2022.
• Spring also brought higher-than-usual tax refund checks that have likely dried up.

Some relief might be on the way. Walmart said that it’s investing its tariff refund—a record $2.9 billion—back into lowering prices. Last quarter, the retailer said it eased prices on 11,000 items, an increase from 7,200 products in Q1.

What about the competition? Retail sales across the board were down 0.6% in July compared with June, according to the most recent Census Bureau data. But some areas are doing better than others: Target said its back-to-school sales were up by almost 20% compared with last year, while Home Depot said that sales of items needed for small projects, like painting and gardening, have replaced large-scale remodels.—MM

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