Shares of Walmart (WMT) fell on Thursday after the retail giant reported quarterly results that met earnings expectations but issued a softer-than-expected profit outlook for the current quarter, disappointing investors despite continued sales growth and strong e-commerce momentum.
The company said rising fuel prices are beginning to alter consumer spending patterns, pushing more budget-conscious shoppers toward Walmart stores while also increasing the retailer’s transportation and logistics costs.
Walmart shares dropped more than 3% in pre-market trading after the company projected adjusted earnings per share for the current quarter of 72 cents to 74 cents, below Wall Street expectations of 75 cents per share.
The retailer reported adjusted earnings of 66 cents per share for the quarter ended April 30, matching analyst estimates and rising from 61 cents a year earlier.
Revenue increased 7.3% year over year to $177.75 billion, topping expectations of $175 billion.
Fuel prices pressure consumers
Chief Financial Officer John David Rainey said higher gasoline prices are having an uneven impact across income groups.
“The headline consumer is reasonably healthy, but when you look underneath, the pressure is uneven,” Rainey said. “The low-income shopper you can tell is more budget conscious,” as fuel prices rise, he said.
The national average gasoline price has climbed to $4.56 per gallon, according to AAA, up sharply from $3.18 a year ago.
Walmart said higher fuel costs increased the value of its inventory while also raising transportation expenses tied to stocking stores and fulfilling online orders.
The company said those pressures were partially offset by stronger sales and growth from higher-margin businesses such as advertising.
Rainey added that higher-income shoppers continued shifting toward Walmart’s online delivery services and premium merchandise categories, including fashion and beauty.
In response to the evolving consumer environment, Walmart said it plans to continue emphasizing low prices to capture additional market share.
The company maintained its full-year financial guidance but said full-year sales are expected to land near the upper end of its previous forecast for growth between 3.5% and 4.5%.
E-commerce and advertising support growth
Walmart’s US comparable sales, which include stores and digital channels operating for at least 12 months, rose 4.1% during the quarter.
That matched analyst expectations but marked the slowest growth rate for the metric since early 2024.
By comparison, rival Target reported comparable sales growth of 5.6% a day earlier and raised its full-year growth outlook.
Walmart continued to see strong growth in e-commerce and advertising operations.
Global e-commerce sales rose 26% year over year, driven by growth in online advertising and third-party marketplace sales.
The company said e-commerce now accounts for nearly a quarter of total global sales.
Advertising revenue surged 37%, while membership-fee revenue rose 17.4%.
At Sam’s Club, comparable sales increased 3.9%, ahead of analyst estimates, as customer transactions climbed 6.2%.
Net income rose nearly 19% year over year to $5.33 billion.
Investors focus on outlook
Despite the solid quarterly performance, investors appeared concerned about Walmart’s cautious near-term earnings guidance and moderating comparable sales growth.
The company’s stock had already gained more than 17% this year heading into the report, outperforming the broader S&P 500.
Walmart also said it has filed for tariff refunds after the US Supreme Court deemed certain tariffs illegal.
Rainey estimated the company had paid roughly $2.4 billion in tariffs, though he said Walmart does not expect a major financial windfall from the effort.
Analyst sentiment on the stock remained broadly positive, with the majority of Wall Street firms continuing to rate Walmart as a buy.
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