Walmart increases grocery discounts amid economic headwinds
Walmart, the nation’s largest private employer, increased the number of discounts, especially in its grocery business, as it looks to offset the impact of tariffs and attract shoppers.
The Arkansas-based company, which economists use as a gauge to understand consumer health, said in its second-quarter earnings report that it offered more than 7,400 "rollbacks," or discounts, during the three-month period ending in July. Walmart also provided 30% more grocery discounts compared to a year earlier, which helped drive sales.
Walmart reported $177.4 billion in revenue, up nearly 5% from the same period last year, beating Wall Street expectations.
However, the retailer credited its U.S. sales growth in part to the increased discounts. Walmart’s U.S. sales hit $120.9 billion in the second quarter, up about 5%, or $5.6 billion from last year. Sales at stores open at least a year rose 4.6%, which Walmart said was driven by strong demand for groceries and health products.
Walmart also began offering its employees financial relief by extending its 10% employee discount on nearly all groceries as food prices continue to strain household budgets.
The company has continually said it "will play offense" and may make strategic investments to strengthen its value proposition as it contends with tariffs, which the Trump administration has implemented in an effort to bring manufacturing back to the U.S.
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Walmart executives warned that it was not able to absorb all the pressure of tariffs given the reality of narrow retail margins and that consumers could see price hikes by May.
Nearly two-thirds of Walmart U.S. spending goes toward products made, assembled or grown in the U.S., but the remaining third comes from around the world, with China and Mexico being the largest contributors.
The company is also facing higher operating expenses, largely from a backlog of liability claims, many of which stemmed from the pandemic.
The company had to set aside an additional $450 million last quarter to cover insurance costs tied to things like workplace injuries and liability claims, cutting into profits. Walmart said it isn't seeing an increase in claims.
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Walmart also saw a boost in its e-commerce sales, which rose 26% during the quarter.
The company raised its outlook for fiscal 2026, projecting that sales will climb 3.75% to 4.75%. Earnings per share are now projected at $2.52 to $2.62.
