Walmart reported its slowest US sales growth since early 2020 on Thursday, as new federal drug pricing rules and rising fuel costs weighed on shoppers. At the same time, the company disclosed it had received $2.9 billion in tariff refunds — money it says it is now using to cut prices across its stores.
US comparable sales — a measure of revenue at stores open at least one year — rose 2.6% in the quarter ended July 31, down from 4.1% in the previous quarter and well short of the 3.8% analysts had expected. It was the weakest quarterly result in six years.
The shortfall was partly structural. Federal legislation now requires pharmacies to dispense certain high-cost Medicare drugs at capped prices — a rule that has hurt Walmart's pharmacy segment. Strip out the pharmacy and wellness category, and US comparable sales grew 3.4% in the quarter, according to Reuters.
Fuel costs are adding further pressure. Walmart expects more than $2 billion in additional costs from higher fuel prices this year, linked to rising global oil prices.
Despite the softer sales, Walmart's profit jumped. Quarterly net income came in at $6.37 billion, or 80 cents per share, for the three months ended July 31. Operating income rose nearly 30% compared with the same period last year, boosted in part by the tariff refunds.
Those refunds are the result of a Supreme Court ruling that struck down President Trump's so-called Liberation Day tariffs — broad import duties the court found were unlawfully imposed under presidential emergency powers. The ruling triggered a government-wide repayment process. A court filing from US Customs and Border Protection shows that roughly $100 billion in tariff refunds have been issued across all importers as of July 31.
Walmart's share of that total is $2.9 billion. Chief financial officer John David Rainey confirmed on the company's earnings call that Walmart has received 'substantially all' of the refund and is directing the money toward price cuts in grocery and general merchandise. Walmart had been among the first large retailers to signal this intent: as early as May 2026, it indicated it would use tariff refunds to lower prices as the government began repaying importers.
The investment is visible on shelves. Walmart's so-called rollback items — temporary price reductions — grew from roughly 7,200 at the end of the prior quarter to more than 11,000 in the second quarter, with cuts applied to products including ground beef, Coca-Cola and laundry detergent, according to CBS News.
Not all parts of the business are under pressure. Global e-commerce sales rose 23% in the quarter, a bright spot in an otherwise cautious report.
Investors were not reassured by the profit beat. Walmart shares fell more than 9% in early trading on Thursday following the earnings release, as the headline sales miss and the uncertain outlook on fuel costs and pharmacy revenues overshadowed the windfall from the tariff refunds. Whether the price rollbacks will be enough to lift consumer traffic in the second half of the year remains to be seen.
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