Walmart Warns Of Pressure On Shoppers As High Gas Prices Weigh On Spending

Walmart warned Thursday that higher gas prices are putting pressure on American shoppers. The country’s largest retailer issued a weaker-than-expected financial outlook despite reporting strong quarterly sales growth amid ongoing economic uncertainty tied to inflation, the war in Iran and global trade tensions.

The retailer said it expects adjusted earnings per share for fiscal 2027 to range between $2.75 and $2.85, below Wall Street expectations of $2.91 while forecasting annual net sales growth of 3.5% to 4.5%, CNBC noted.

Walmart also projected second-quarter adjusted earnings of 72 cents to 74 cents a share, short of analyst estimates of 75 cents, while forecasting quarterly net sales growth between 4% and 5%.

The cautious guidance came as fuel prices remained elevated following renewed tensions in the Middle East and as U.S. consumer sentiment deteriorated in recent months. The University of Michigan’s consumer sentiment index fell to another record low in May, reflecting continued concerns about inflation and household finances, according to a recent IBT report.

Walmart finance chief John David Rainey said higher tax refunds earlier in the year helped soften the impact of rising fuel prices on consumers during the first quarter, but those pressures are becoming more visible.

“I think higher tax returns muted some of the pressure related to higher fuel prices and as we’re in a period of time right now where those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices,” Rainey told CNBC.

“It’s something that we’re keeping a close eye on, but that expectation is built into our guidance for the second quarter,” he added.

Rainey also said Walmart absorbed roughly $175 million in higher fuel-related costs during the quarter.

“It’ll probably be larger than that in the second quarter if fuel prices stay where they are, so we’re absorbing those prices and still maintaining our guidance, and I feel really good about that,” he said in the interview with the outlet.

The company’s comments arrived as retailers across the U.S. continue to monitor how persistent inflation and higher borrowing costs are affecting consumer spending patterns. The Wall Street Journal reported this week that several large retailers continue to see steady demand, though shoppers are becoming more selective and increasingly focused on lower-priced purchases.

Walmart’s quarterly results showed consumers were still spending, particularly on essentials and online purchases. Revenue rose 7% to $177.8 billion in the quarter ended April 30, up from $163.98 billion a year earlier, according to Walmart earnings figures.

The revenue total exceeded analyst expectations of $174.98 billion, while adjusted earnings matched forecasts at 66 cents a share.

Net income rose to $5.33 billion, or 67 cents a share, from $4.49 billion, or 56 cents a share, a year earlier.

The retailer also said global e-commerce sales increased 26% during the quarter, while its advertising business grew 37%, helping support margins as costs climbed elsewhere in the business.

Walmart shares fell about 2% in premarket trading after the company released results and guidance.

The softer outlook contrasted with generally stronger first-quarter sales reported by major retailers in recent days. Associated Press reported that retailers including Target cited tax refund spending as a factor supporting consumer demand earlier this year even as inflation pressures persisted.

Target executives said Wednesday that shoppers remained cautious and increasingly focused on essentials, echoing broader concerns about household budgets as gas prices and other costs rise.

Walmart has historically been viewed as one of the retailers best positioned during economic downturns because of its scale and low-price reputation. In recent years, the company has also attracted more higher-income shoppers, helping strengthen sales even as lower-income households face greater financial pressure.

The retailer’s latest results marked only the third time in the past 16 quarters that Walmart failed to exceed quarterly earnings expectations.