Walmart is preparing to push prices lower after a quarter that offered a clear warning about how much pressure American shoppers are feeling.
According to Reuters, Walmart reported its slowest comparable sales growth in six years as higher gasoline prices and tighter household budgets weighed on spending. Comparable sales at Walmart’s U.S. business rose 2.6 percent during the quarter, below the 3.8 percent increase analysts surveyed by LSEG had expected. Walmart price cuts are now becoming a bigger part of the retailer’s strategy as it tries to keep shoppers spending through a tougher consumer environment.
The company has an unusually large pool of money to help fund that effort. Reuters reported that Walmart received $2.9 billion in tariff refunds and plans to use part of that money to support aggressive price reductions. The retailer has already announced price rollbacks across 11,000 products as it leans harder into the value message that has long been central to its business.
Those Walmart price cuts arrive at a moment when fuel is eating up more of many households’ monthly budgets. According to the U.S. Energy Information Administration, the national average price for regular gasoline reached $4.096 per gallon during the week of July 27 before easing to $4.006 by August 10. Walmart now expects roughly $2 billion in additional fuel expenses beyond its previous forecast.
Walmart Chief Financial Officer John David Rainey acknowledged that shift in spending pressure during the company’s earnings call. According to CNN, Rainey said there is “arguably a softer consumer environment than in February” before gasoline prices climbed.
“It sort of states the obvious, (we are) seeing some incremental pressure on the consumer relative to the beginning of the year with higher fuel prices,” Rainey said.
He added that when gas prices move above $4 per gallon, “there’s a psychological impact to that. That there are choices that consumers are making.”
Those choices are showing up beyond Walmart. The U.S. Census Bureau reported that U.S. retail and food service sales fell 0.6 percent in July from the previous month to an estimated $763.6 billion. Sales were still 5 percent higher than a year earlier, but the monthly decline added another sign that consumers were becoming more selective about where their money goes.
That makes Walmart price cuts more than a promotional play. The retailer is trying to protect traffic at a time when shoppers may be cutting discretionary purchases, shifting purchases online, or putting a larger share of their income toward fuel and other necessities.
Traffic at Walmart grew 1.5 percent during the latest quarter, down from 3 percent during the first quarter, according to Reuters. Average spending per transaction increased 1.1 percent, compared with a 3.1 percent gain during the same period last year. Walmart’s U.S. comparable sales growth improved to 3.4 percent when its pharmacy business was excluded.
Digital sales remain one of the strongest parts of the company. Reuters reported that Walmart’s e-commerce sales increased 24 percent during the quarter. Walmart Connect advertising revenue jumped 43 percent, while membership revenue grew 17 percent. Those faster-growing businesses give Walmart additional sources of income as it spends more aggressively to keep shelf prices competitive.
The company was already preparing investors for tariff refunds earlier this year. In its May earnings materials, Walmart specifically said its fiscal 2027 guidance did not assume any impact from refunds tied to tariffs imposed under the International Emergency Economic Powers Act. The $2.9 billion refund therefore gives the retailer financial flexibility that was not built into its previous outlook.
The refunds followed a major legal fight over the tariffs. According to the U.S. Supreme Court docket, the justices issued their decision on February 20, 2026, affirming the judgment in one of the cases challenging the tariff program. The Court concluded that the tariff authority at issue could not be exercised under the International Emergency Economic Powers Act in the manner challenged by importers.
Walmart is far from the only retailer benefiting. According to an official Target earnings release, Target recorded $994 million in tariff refund benefits during its second quarter. The company said those refunds added $752 million to net earnings and contributed $1.65 per share to quarterly earnings.
Home Depot also received a significant payout. According to Reuters, the home improvement chain received $730 million in tariff refunds during its second quarter, with $685 million reducing its cost of goods sold. Home Depot said the refunds would help absorb higher fuel costs and other unexpected expenses.
Walmart is taking a more visible approach by connecting its refund to what it calls “price investments.” Those Walmart price cuts could become an important test of whether lower shelf prices can loosen shoppers’ wallets when other household expenses are moving in the opposite direction.
Investors did not wait for the strategy to play out. Reuters reported that Walmart shares fell more than 9 percent Thursday, wiping out more than $80 billion in market value and producing the stock’s sharpest one-day decline since May 2022. The selloff came even as Walmart raised its fiscal 2027 sales outlook, forecasting net sales growth between 4 percent and 5 percent and adjusted earnings between $2.80 and $2.87 per share.
Walmart has spent years positioning itself to capture shoppers who trade down when money gets tight. Now, with billions in tariff money coming back and consumers showing more caution, the retailer is betting that putting more of that cash behind lower prices can keep customers filling their carts.
