Walmart reports rare sales miss as consumers cut spending

Published Thu, Aug 20, 2026 · 10:20 PM

[NEW YORK] Walmart missed quarterly comparable sales estimates for the first time in at least five years on Thursday (Aug 20), underscoring the strain of rising fuel costs on consumer spending and knocking its shares 8 per cent lower in early trading.

The world’s largest retailer slightly raised its annual sales and profit targets, but said it expects fuel prices to remain steady, leading to an expected US$2 billion in incremental fuel-related costs above original guidance.

“When fuel prices increase and get above US$4, perhaps there’s a psychological impact to that … consumers are making trade-offs,” CFO John David Rainey said on a call with analysts on Thursday.

The results offer a key read on the retail bellwether’s ability to attract price-sensitive shoppers as they prioritise groceries and other essentials over discretionary spending ahead of the back-to-school and holiday seasons.

Walmart’s second-quarter US same-store sales rose 2.6 per cent, compared with estimates of a 3.8 per cent increase, according to data compiled by LSEG. Average ticket, or spending per transaction, grew 1.1 per cent, well below a 3.1 per cent rise a year ago.

Walmart said it cut prices on 11,000 items during the quarter, but cautioned that the rollbacks began in July and corresponding sales growth might not show up until next quarter.

The report was unusual for the retailer, which has a track record of lifting forecasts during the year and comfortably beating comparable sales estimates.

E-commerce and delivery speeds were a strength, with the company saying it doubled the number of units delivered in under 30 minutes versus a year ago, with 70 per cent of all e-commerce orders delivered same-day or better.

The company said it received nearly all of the US$2.9 billion in tariff refunds it had been expecting, and is reinvesting the savings in price, largely in the grocery and general merchandise categories that represent the bulk of its retail sales.

But “you don’t necessarily expect to have that offsetting benefit to the lower prices in the immediate period,” said CFO Rainey, adding he expects price investments to lead to results next quarter.

“For the consumer economy, this is like Nvidia posting a slowdown,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. “Walmart has been winning the trade-down trade, but that tailwind may be fading.”

Walmart now expects fiscal 2027 net sales to grow between 4 per cent and 5 per cent, compared with its earlier target of growth between 3.5 per cent and 4.5 per cent.

Store traffic growth slowed to 1.5 per cent in the latest three months from 3 per cent in the first quarter.

That was the bigger concern for investors, and the number they will be closely watching in the current quarter, Melius Research analyst Jacob Aiken-Phillips said.

“Walmart is spending real money on price and has not yet gotten a trip acceleration in its largest business,” Aiken-Phillips said. “That is the number that has to improve in 3Q, and it is a higher bar than the comp itself.”

Walmart Connect, the US advertising business, grew 43 per cent, while its e-commerce sales increased 24 per cent.

However, growth rates in these businesses, while impressive, were not enough, Annex Wealth’s Jacobsen said. “The bread and butter of the company is still in-store and in-person shopping.”

Sales dropped in its US pharmacy business, as lower prices negotiated under the Inflation Reduction Act’s Maximum Fair Price programme reduced the amount consumers spent on each visit.

Excluding the impact from the act, core US comparable sales rose 3.4 per cent, its slowest pace since the first quarter of fiscal 2023.

Walmart now expects annual adjusted earnings per share of between US$2.80 and US$2.87, compared with its earlier target of between US$2.75 and US$2.85. Its quarterly earnings per share of 81 US cents beat estimates by 7 US cents.

It expects third-quarter adjusted earnings per share of between 62 US cents and 64 US cents, below estimates of 68 US cents, while its net sales growth target of 3 per cent to 3.75 per cent was also lower. REUTERS