Walmart Inc. WMT is aggressively increasing discounts to combat rising costs from tariffs, as the retail giant sees middle and lower-income shoppers altering their spending habits in response to higher prices.
Check our WMT’s stock price here.
Walmart Protects Shoppers From Inflationary Pressures
The company is leaning into its price leadership to protect consumers from inflationary pressures.
It now features approximately 7,400 price rollbacks, an increase of about 2,000 from the previous quarter, with rollbacks in the grocery category up 30% compared to last year.
CEO Doug McMillon affirmed the strategy on the company’s earnings call, stating, "given tariff-related cost pressures, we’re doing what we said we would do. We’re keeping our prices as low as we can for as long as we can". This offensive strategy aims to solidify the market share gains the company has seen across all income groups.
Middle And Lower Income Groups Bear The Brunt
Management noted that while consumer behavior has been generally consistent, there are clear signs of pressure.
"Not surprisingly, we see more adjustments in middle and lower income households than we do with higher income households," McMillon said.
He added that in categories where prices have risen, Walmart has observed a "corresponding moderation in units at the item level as customers switch to other items".
See Also: Walmart Stock Falls on Mixed Q2 Results Despite Raised Guidance
Unexpected Costs Hit WMT’s Q2 Profitability
Despite the strong sales, Walmart's adjusted operating income grew just 0.4% in constant currency. While its sales of $177.40 billion, up 4.8% year over year, outpaced the Street estimate of $176.16 billion. Total revenues, on a constant currency basis, increased by 5.6%.
However, the profit was significantly impacted by a $450 million increase in accruals for general liability claims, which created a 560 basis point headwind. Its adjusted earnings per share of 68 cents missed the analyst consensus estimate of 74 cents.
The company maintained its full-year profit guidance, signaling confidence in its ability to absorb these costs while continuing to invest in price. It expects the third quarter adjusted EPS will range from 58 to 60 cents, above the 57 cents estimate. Also, it forecasts constant currency sales between $175.95 billion and $177.64 billion, compared to the $176.33 billion estimate.
Price Action
Shares of WMT fell 4.49% on Thursday and 0.020% in after-hours. They have risen by 8.84% year-to-date and 29.61% over the past year.
Benzinga’s Edge Stock Rankings indicate that WMT maintains a stronger price trend in the short, medium, and long terms. However, the stock scores moderately on value rankings. Additional performance details are available here.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Thursday. The SPY was down 0.40% at $635.55, while the QQQ declined 0.46% to $563.28, according to Benzinga Pro data.
On Friday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading mixed.
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