Walmart had an outstanding Q2 by most metrics, beating earnings and revenue estimates and even increasing its financial outlook for the remainder of its fiscal year – but it was the sluggish same-store sales growth that sent the company’s stock value tumbling by more than 9% on Thursday.
The same-store sales growth rate indicator excludes newly opened and recently closed stores to provide a more precise measurement of sales growth, and Wall Street analysts took notice when its Q2 report showed the bellwether retailer’s performance of just 2.6%.
Wall Street analysts’ expectations set the growth figure at 3.5%, and a year ago, the same-store sales ratio was at 4.6%.
The economic indicator is not just bad news for Walmart; as the world’s largest retailer, the news could signal a broader economic slowdown.
For packaged food manufacturers and other retailers, softer growth could also mean consumers are becoming more selective about what they buy, increasing pressure on brands to demonstrate value and on retailers to compete more aggressively on price.
Walmart grocery sales remain steady
Walmart explained on Thursday that the poor showing in same-store sales (also known as comparative or comp sales) was partly driven by a roughly 1.25% decline in its pharmacy business, due to the implementation of the Maximum Fair Price (MFP) regulation, which placed Medicare price caps on some drugs starting at the beginning of 2026.
Walmart also is feeling pressure in its pharmacy business from the release of generic versions of some GLP-1 drugs, reducing the company’s revenue from the popular weight-loss drugs.
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Walmart CFO John David Rainey explained that Walmart’s “core categories” of groceries and general merchandise “have been extremely consistent, largely in the 3% to 4% range on a quarterly basis.”
The pharmacy tailwind, particularly from GLP-1 sales, is softening, though, he said.
“When looking at the Walmart US total comps, including health and wellness, during each of FY 2025 and FY 2026, we realized 100 basis points of a tailwind from sales of GLP-1 branded drugs,” he said. “In FY 2027, the benefit from GLP-1 is expected to be roughly half that amount, as script count growth is more than offset by price mix headwinds.”
Strong growth in e-commerce
Although the retailer took a hit in its physical store sales, due in part to its pharmacy business, Walmart’s e-commerce business grew significantly, according to CEO John Furner.
“We grew units and transactions, and membership fee revenue was at an all-time high on growth of 17%,” he said. “We delivered another quarter of strong e-commerce growth, up 23% globally, including the 10th consecutive quarter of growth over 20% for Walmart US.”
The company expanded its Walmart+ loyalty program and online Marketplace platform to regions outside the US, Furner explained.
“The sustained growth we have seen in e-commerce across the company over multiple years points to more than a digital success story. It is evidence that customers and members increasingly choose Walmart because they know we combine low prices across a broad assortment with speed and convenience,” he said. “The mix of e-commerce for Walmart International is now 30%, with strong growth again this quarter in China, India and Canada.”
Tariff refund nearly $3 billion
Walmart reported that it has received $2.9 billion in a tariff refund from the federal government, the result of a US Supreme Court decision in February that declared illegal the Trump administration’s tariff regime under the International Emergency Economic Powers Act.
The refund is roughly three times the size of one of Target’s, which reported a pre-tax refund of $994 million on Aug. 19.
That helped Walmart’s adjusted operating income growth of 17.4% for the quarter. Furner said Walmart plans to invest the refund into price cuts.
Rainey explained that Walmart is prioritizing investment in grocery and merchandising categories, but did not give details.
“Looking forward, our Q3 guidance reflects the continued impact of pricing actions taken in Q2, alongside continued prioritization of tariff refunds into price investment,” Rainey said.
Walmart’s price cuts
Walmart US delivered more than 11,000 “price rollbacks” in Q2, up from 7,200 in the first quarter, according to Furner. He noted that most quarters the company rolls back prices on roughly 5,000 products.
The price cuts are aimed at inflation-weary consumers who are becoming increasingly price conscious.
“We’re investing heavily in price because customers need us to and because we believe it drives market share gains over time,” Furner said. “Our price gaps to conventional grocers here in the US are strong, and they continue to widen.”
