The U.S. same-store sales growth rate at Walmart, the nation's largest retailer, fell to its lowest level in six years. Shares tumbled sharply as results missed market expectations and concerns about a consumer slowdown mounted.
Walmart said on the 20th (local time) that total revenue in the fiscal year second quarter (May–July) rose 5.9% from a year earlier.
Digital businesses such as e-commerce and advertising continued to grow. Global e-commerce sales rose 23% and global advertising revenue increased 38%, supporting overall results.
In contrast, U.S. same-store sales, a key metric, rose only 2.6% excluding fuel sales. That is the lowest growth rate in six years. It slowed from the previous quarter's 4.1% growth rate and missed the market estimate of 3.8%.
Walmart executives said on a conference call that federal government policies and regulatory changes related to drug prices affected revenue in the pharmacy business. Because more consumers buy the drugs in-store rather than via online delivery, it also affected same-store sales.
John David Rainey, Walmart's chief financial officer (CFO), said in an interview with CNBC that weakness in the pharmacy business is a temporary factor but could continue into next year.
The amount consumers spend per visit also declined. With the burden of high inflation and high oil prices persisting, consumers—particularly low-income shoppers—are cutting expenditure and becoming more cautious about purchases.
Walmart shares plunged after the earnings release. As of 11 a.m., Walmart shares were down about 9.4% on the New York stock market, marking the biggest one-day drop since July 2022.
Bloomberg said that as growth at Walmart, a leading retailer seen as a gauge of the U.S. consumer economy, slows, concerns about overall U.S. consumption are growing.