Key Takeaways:
Walmart received nearly $2.9 billion in federal tariff refunds, lifting fiscal 2027 second-quarter operating income 28.8% to $9.5 billion.
"We're investing heavily in price because customers need us to and because we believe it drives market share gains over time," John David Rainey, executive vice president and chief financial officer at Walmart, said on the earnings call.
Revenue reached $187.94 billion, beating the $186.77 billion consensus, while e-commerce sales rose 23%. Gross profit rate climbed 96 basis points. The company delivered 11,000 price rollbacks in the quarter, up from 7,200 in the first quarter. Net income came in at $6.4 billion, and Walmart raised its full-year forecast.
The refunds stem from a Supreme Court ruling in February that struck down tariffs imposed under the International Emergency Economic Powers Act. As of July 31, the government had returned about $100 billion of the $168 billion collected from importers, according to a court filing.
Walmart will not reimburse customers directly. Instead, it is directing the money toward price cuts and customer experience investments, Rainey said. "Our team delivered another good quarter, and we continue to make steady progress on the long-term value drivers of our business," president and CEO John Furner said.
US comparable sales rose 2.6% in the quarter, the slowest in six years, as higher fuel prices pressured shoppers. Rainey described a "softer consumer environment" than in February, noting that when gas tops $4 a gallon it has a psychological effect on spending choices. Walmart shares fell about 7% in premarket trading Thursday.
The refund is among the largest reported by retailers. Target disclosed nearly $1 billion, TJX $331 million, Home Depot $730 million and Lowe's $80 million. Apple, Nike, Amazon and FedEx have also booked refunds in recent earnings.
Neil Saunders, managing director at GlobalData Retail, said Walmart is likely to focus the money on price savings for essential items to maintain its "Everyday Low Price" positioning, with wider investments in store improvements.
The refunds give Walmart a cushion to defend its low-price positioning as consumers pull back on discretionary spending. Investors will watch whether the price investments translate into comparable sales growth in the holiday quarter.
This article is for informational purposes only and does not constitute investment advice.
