Walmart sees sales drop as US consumer spending retreats

Walmart sales are slumping as US consumer spending pulls back, with the economic impact of tariffs and the United States’ tensions with Iran weighing on consumers, the big-box retailer’s most recent earnings report shows.

US same-store sales rose 2.6 percent in the second quarter, according to the company’s earnings released on Thursday, falling short of the 3.8 percent forecast by analysts at LSEG. That marked the slowest quarterly increase in six years.

The Bentonville, Arkansas-based retailer said heightened petrol prices are to blame for the slowdown in spending.

“When fuel prices increase and get above $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.

Prices are continuing to jump. The average price for a gallon (3.78 litres) of petrol rose to $4.10 on Thursday, up from $4.07 a week ago, according to the American Automobile Association, which tracks daily petrol prices. By comparison, the average price was $2.98 when the US and Israel first struck Iran.

The big-box retailer also said it expected $2bn in incremental fuel-related costs above its original guidance.

Sales dropped in Walmart’s US pharmacy business and also dipped elsewhere. Overall, quarterly revenue rose 3.4 percent, the slowest pace since the first quarter of fiscal 2023.

Consumers are spending more in the checkout line — 1.1 percent higher than the previous quarter — but it is still well below the 3.1 percent jump this time last year.