Walmart says it is channeling a $2.9 billion tariff refund into lower prices for shoppers, with much of the spending focused on grocery and general merchandise. The move comes as the largest US retailer reports signs that consumers are becoming more selective about where their money goes.
The company received “substantially all” of the tariff refunds for which it was eligible during the latest quarter. At the same time, Walmart’s US comparable sales rose just 2.6%, its slowest rate of growth in six years, while higher fuel prices and weaker consumer sentiment weighed on household spending.
Walmart Puts Tariff Refund Into Price Cuts
Walmart executives said the company is using the refund to support what it describes as price leadership and improvements to the customer experience. According to CBS News, Chief Financial Officer John David Rainey said the retailer is prioritizing investments in grocery and general merchandise. “We’re investing heavily in price because customers need us to and because we believe it drives market share gains over time,” Rainey said during the company’s earnings call.
The company delivered more than 11,000 rollbacks, or temporary price cuts, across its US business during the second quarter. That was up from 7,200 in the first quarter, according to reports. Walmart had also announced price reductions in July on thousands of products, including ground beef, Coca-Cola, potato chips and laundry detergent.
CEO John Furner said the company intends to continue moving discounts across different parts of the store rather than concentrating them in only a few categories. “We know customers are looking for a variety of things across the basket at a time,” he said.
The refund followed a February Supreme Court decision striking down tariffs imposed under the International Emergency Economic Powers Act. By July 31, the US government had returned about $100 billion in tariff payments, according to a court filing cited by CBS News. Walmart’s $2.9 billion refund is the largest publicly reported by a US company so far. Other retailers have also disclosed significant repayments, including Target at $994 million, Home Depot at $730 million, TJX at $331 million and Lowe’s at $80 million.
Slower Sales Growth Points to Pressure on Household Spending
Walmart’s overall revenue reached $187.9 billion for the quarter, an increase of 5.9% from a year earlier. Net income totaled $6.4 billion, while operating income rose nearly 30%, with the tariff refund contributing to the increase.
The stronger profit figures came alongside softer US sales growth. According to CNN, comparable sales excluding fuel increased 2.6%, compared with 4.6% a year earlier. Walmart attributed part of that slowdown to new pharmacy pricing rules, lower prices for GLP-1 drugs and a continued shift toward online shopping.
Executives also pointed to fuel prices as a factor affecting customer behavior. Rainey said the company saw a more noticeable change in June as shoppers made trade-offs in their spending. When gas prices get over $4 a gallon, there’s a “psychological impact to that,” Rainey said. He added that the company was seeing more pressure on consumers than it had earlier in the year.
Walmart shares fell roughly 9% after the results were released as investors focused on the slowdown in US comparable sales. Furner said the company would continue pursuing lower prices through the rest of the year while customers remain under financial pressure.
