Walmart Shares Slide 6% as Retailer Signals Sales Slowdown and Misses Full-Year Target

Wall Street responded swiftly to Walmart’s restrained full-year financial outlook Thursday morning, driving company shares down 6% ahead of the opening bell as the retail giant reported its weakest U.S. comparable sales growth in six years.

Same-store sales across U.S. locations—a metric covering stores open for at least a year plus their associated digital purchases—grew 2.6% during the second quarter. That marks a slowdown from the 4.1% gain posted in the preceding three-month period.

Stripping out the wellness segment containing Walmart’s pharmacies, comparable sales picked up 3.4% for the quarter. The retailer attributed pressure on those sales to federal legislation mandating that pharmacies dispense certain expensive Medicare drugs at capped prices. Even with that adjustment, performance fell short of the 3.8% growth consensus estimate tracked by FactSet.

The legislative price caps stem from federal health provisions aimed at lowering out-of-pocket costs on specialty drugs for seniors, creating revenue headwinds for high-volume prescription retailers despite steady foot traffic.

Walmart’s U.S. e-commerce operations, a key driver of growth for the retailer, rose 24%, trailing the first-quarter pace of 26%.

As one of the earliest major retail operators to publish second-quarter financial results, Walmart gives economists and industry analysts a fresh indicator on whether sustained price inflation linked to the conflict in Iran is altering consumer purchasing patterns.

The company is widely viewed as a bellwether for overall retail health due to its massive footprint, logging over 150 million shoppers weekly across its stores and website, according to Walmart.

Those metrics command heightened focus after U.S. economic reports published Friday highlighted unexpectedly soft July retail sales alongside a University of Michigan survey pointing to deepening consumer pessimism as households face elevated costs for groceries, fuel, and daily necessities.

FactSet data indicates that Walmart’s latest quarterly results mark its lowest U.S. comparable store sales increase since the 1.9% rise recorded for the period ending Jan. 31, 2020.

Persistent price pressure has expanded the retailer’s consumer demographic, enabling it to attract a higher proportion of affluent shoppers. Walmart is seeing its most substantial market share gains among households earning more than $100,000 annually.

For the three-month quarter ending July 31, Walmart reported net income of $6.37 billion, or 80 cents per share. Adjusted earnings per share reached 81 cents, easily beating the Wall Street estimate of 74 cents, according to FactSet.

Quarterly revenue climbed 5.9% to $187.94 billion, surpassing the $186.62 billion expected by Wall Street analysts, according to FactSet.

Looking ahead to the third quarter, Walmart anticipates per-share earnings of 62 cents to 64 cents and sales growth of 3% to 3.5%, placing revenue between $184.88 billion and $186.23 billion. Both projections fell short of Wall Street estimates of 68 cents per share on sales of $188.19 billion, according to FactSet.

For the full fiscal year, the company projects earnings per share between $2.80 and $2.87, with total sales expected to grow 4% to 5% to reach $741.7 billion to $748.8 billion, according to FactSet.

That full-year guidance sits below consensus forecasts from analysts, who had been expecting full-year earnings of $2.90 per share on sales of $752.06 billion, according to FactSet data.