Walmart uses tariff refunds to lower prices

Walmart says it is using a nearly $3 billion tariff refund windfall to cut prices for shoppers who are still being squeezed by inflation and higher fuel costs, even as the retailer reported its slowest U.S. comparable sales growth in years.

The Arkansas-based company said Thursday that it has received “substantially all” of the $2.9 billion in tariff refunds it was eligible for. John David Rainey, Walmart’s executive vice president and chief financial officer, said the company is directing the money toward improving customers’ experiences, with a focus on grocery and general merchandise.

“We’re investing heavily in price because customers need us to and because we believe it drives market share gains over time,” Rainey said on the company’s earnings call.

Walmart reported that operating income in the second quarter rose nearly 30% from a year earlier, a gain it attributed in part to the tariff refunds. But U.S. comparable sales, a measure that includes sales at stores open at least a year and online sales tied to those locations, rose 2.6% in the quarter, down from 4.1% in the first quarter. NBC News reported that it was the lowest same-store sales growth Walmart has posted in years.

The slower growth rattled investors. Walmart’s stock fell 9% in Thursday morning trading, and NBC News reported that its shares were down more than 23% from a recent high in May, pushing the company out of the $1 trillion market value club.

Walmart said customers remain under pressure. “Customers tell us they’re still feeling some pressure,” said Walmart CEO John Furner. “Having the best prices across a basket of goods helps us continue to build trust with our customers and members by helping them save money at a time when many households are carefully managing their budgets.”

The retailer said its U.S. business delivered more than 11,000 rollbacks, or temporary price cuts, in the second quarter, up from 7,200 in the first quarter. The cuts included summer barbecue items, and CBS News reported that Walmart in July lowered prices on thousands of products, including beef, Coca-Cola and laundry detergent.

Higher fuel costs are also weighing on shoppers and on Walmart. NBC News reported that the company expects more than $2 billion in added costs this year from higher fuel prices tied to soaring global oil prices stemming from the U.S.-Israeli war with Iran. Rainey said consumers appeared to change spending patterns as gasoline rose above $4 a gallon.

“As you go through month by month in the last quarter, you can tell when fuel prices increase and got above $4, and perhaps there’s a psychological impact to that, that there are choices that consumers are making,” Rainey said. “It’s why we have lean so heavily into lower prices.”

Walmart also attributed weaker sales growth in part to new federal drug pricing rules that reduced the price of several expensive medications for Medicare enrollees, according to NBC News.

The refunds stem from tariffs imposed during the Trump administration under the International Emergency Economic Powers Act. The Supreme Court struck down those tariffs in February, and the U.S. government had refunded about $100 billion in IEEPA tariffs as of July 31, according to a court filing cited by CBS News. NBC News reported the figure came from U.S. Customs and Border Protection.

Other retailers have also received refunds. Target said it received nearly $1 billion in tariff refunds and has reduced prices on more than 10,000 items in the past year, according to NBC News.