Walmart Raises Full-Year Forecast Amid Tariff Refund, But Stock Dips on Sales Concerns

Walmart is anticipating the release of its fiscal second-quarter earnings before the market opens on Thursday, offering key insights into the current state of the U.S. consumer. The retail giant, which has focused on providing value to lower-income customers while attracting more affluent shoppers, has demonstrated resilience against broader macroeconomic challenges. However, the company has acknowledged a widening gap between different income demographics.

As the largest retailer in the United States, Walmart holds a unique vantage point for observing consumer trends. According to an analysis of analyst forecasts by LSEG, the company is projected to achieve:

• Earnings per share: 74 cents
• Revenue: $186.77 billion

In the previous quarter, Walmart issued a less optimistic annual forecast than Wall Street had predicted, citing soaring gas prices and diminished consumer confidence. This marked only the third instance in sixteen quarters where Walmart failed to exceed quarterly earnings expectations.

Walmart's Chief Financial Officer, John David Rainey, had previously suggested to CNBC that higher tax refunds might have temporarily softened consumer pressures in the early months of the year. He noted that this expectation has been incorporated into their second-quarter guidance.

Analysts at Bernstein, in a late July report, indicated they believe Walmart is experiencing a slowdown in comparable sales. This is attributed to the expiration of tariff-driven price increases, which had previously boosted revenue. They also pointed to ongoing price reduction discussions among grocers, less favorable trends from competitors, and persistent inflationary impacts on lower-income consumers as factors contributing to increased uncertainty. Nevertheless, Bernstein analysts maintain that Walmart remains in a fundamentally strong position due to its pricing strategies, product selection, and delivery capabilities.

The company is also expected to provide details on how tariff refunds influenced its business performance during the quarter. Competitor Target recently reported that its quarterly results benefited from a $752 million boost to net earnings, equivalent to $1.65 per share, due to tariff refunds. Similarly, home improvement retailers Home Depot and Lowe's also saw their earnings rise from these refunds. Home Depot specifically stated that $685 million of its refunds were utilized to decrease the cost of goods sold.

Translated to English:

Walmart is expected to report its fiscal second-quarter earnings before the market opens on Thursday, providing its latest assessment of the health of the U.S. consumer. The retailer, which has been focusing on prioritizing value for its lower-income customers while also attracting more high-income shoppers, has largely been insulated from macroeconomic pressures. However, the company has previously indicated that it is observing a widening divide between income groups.

As the largest U.S. retailer, Walmart offers a unique perspective on consumer behavior. Based on an analysis of analysts surveyed by LSEG, the company is projected to:

• Earnings per share: 74 cents
• Revenue: $186.77 billion

In the previous quarter, the retailer issued an outlook for the year that was less optimistic than Wall Street had anticipated, attributing this to soaring gas prices and lower consumer confidence. Its fiscal first quarter was only the third time in 16 quarters that Walmart did not surpass quarterly earnings expectations.

Chief Financial Officer John David Rainey had previously told CNBC that he believed higher tax refunds may have "muted" some of the pressure on consumers during the first few months of the year. He stated at the time, "It's something that we're keeping a close eye on, but that expectation is built into our guidance for the second quarter."

Analysts at Bernstein wrote in a late July note that they believe Walmart is experiencing a slowdown in comparable sales due to "the lapping of tariff-driven price increases," which had previously boosted revenue. They added, "This, combined with price cut talks from grocers, weak read-across from peers and ongoing inflationary pressure on the low-income consumer has created an elevated level of uncertainty." Despite these concerns, the analysts expressed that they still view Walmart as being in a "strong fundamental position" with its pricing, assortment, and delivery capabilities.

The retailer is also expected to provide some commentary on how tariff refunds impacted its business during the quarter. Competitor Target announced on Wednesday that its quarterly results included a $752 million boost to net earnings, or $1.65 per share, from tariff refunds. Home improvement retailers Home Depot and Lowe's also reported increases to their earnings from these refunds, with Home Depot noting that $685 million of its refunds were used to reduce the cost of goods sold.