Walmart shares fell 10 percent to $103 on Thursday, a nine-month low, after the retailer reported its slowest US comparable sales growth in more than six years and missed estimates for the first time since 2021. The move coincided with a 2.6 percent increase in comparable sales excluding fuel for the fiscal second quarter, down from 4.1 percent in the prior quarter and below the Bloomberg consensus. The stock has retreated in recent months as investors priced for a higher growth trajectory.
Pharmacy price caps drive the miss
The deceleration was attributed primarily to the company’s pharmacy segment, where federal negotiations imposed a price cap on ten top-selling drugs effective 1 January. Walmart said those lower drug prices weighed on US sales, masking underlying momentum elsewhere. Excluding health and wellness, comparable sales rose 3.4 percent, the weakest pace since the first quarter of fiscal 2023, though the company maintained it continued to gain market share in groceries and other categories.
Tariff refunds lift headline numbers
Beneath the comparable sales headline, the quarter was stronger than the share reaction suggests. Revenue reached $187.94 billion, up 5.9 percent, and adjusted earnings came in at $0.81 per share, both ahead of expectations. The beat was helped by US tariff refunds, which Walmart said were partially offset by price reductions on the shelf. Store traffic growth slowed to 1.5 percent from 3 percent in the first quarter, reflecting what CFO John David Rainey described as a psychological pullback when gasoline prices exceed $4 a gallon.
Guidance raises the bar for the second half
Despite the slowdown, Walmart raised its full-year sales outlook to 4-5 percent growth from a previous 3.5-4.5 percent range. The third quarter, however, carries lower embedded expectations: adjusted earnings per share of 62-64 cents against a 68-cent consensus, and net sales growth of 3-3.75 percent. Consumer sentiment declined in August for the first time in three months, and the labor market has shown signs of softening, leaving the revised full-year target dependent on a recovery in traffic that has yet to materialize.