Walmart Misses Estimates as Price Cuts Drive Volume Growth

Walmart same-store sales grew 2.6% in the fiscal second quarter, the slowest pace since the end of 2020. The figure missed Wall Street estimates for the first time in several years, and the stock fell about 8% in Thursday trading. The miss came despite an aggressive round of price cuts that pushed transaction counts and unit volumes higher.

The company expanded its price rollbacks to more than 11,000 items during the quarter, up from roughly 7,200 at the end of the first quarter. CEO John Furner said the reductions were spread across food, consumables, fashion and general merchandise, including seasonal and regularly replenished products. “Customers tell us they’re still feeling some pressure,” Furner said on the earnings call. “But it’s clear customers are looking for value and convenience, and they want things fast.”

Grocery comparable sales rose by a mid-single-digit percentage, supported by strong unit volumes, with particular strength in pantry and fresh food. Grocery inflation ran at 1.3%, including a drag from lower egg prices. General merchandise also grew by a low-single-digit percentage, led by toys and fashion. Marketplace sales increased more than 40% in hardlines and home, including furniture.

Walmart’s digital business is accelerating. U.S. eCommerce sales grew 24%, and store-fulfilled delivery sales increased more than 40%. The number of average weekly eCommerce customers rose more than 20%. Furner said fast-delivery orders now include fresh and frozen food, pharmacy, fashion and general merchandise. U.S. fast delivery grew 48%, and 70% of eCommerce orders are delivered the same day or faster.

Membership is reinforcing shopping frequency. Walmart+ posted double-digit U.S. membership growth, with members spending about four times as much as nonmembers, CFO John David Rainey said. Sam’s Club U.S. membership increased nearly 6%.

Automation is becoming a larger part of the fulfillment network. More than 50% of eCommerce fulfillment volume now moves through automated facilities, while 3,100 U.S. stores receive some level of automated freight. Stores serve as the last-mile fulfillment point for 80% of eCommerce orders and all fast deliveries.

Price reductions can make the sales numbers harder to read because shoppers may buy more units without producing the same increase in dollars. Furner said food rollbacks typically generate a unit response first, followed later by market-share gains. “Your shoppers don’t necessarily buy more food because they see lower prices,” he said. “But over time, what we’re trying to do with rollbacks and low prices is build trust with customers.”

Walmart is also getting more business from higher-income households. Rainey said the company is carrying more elevated brands and higher-priced merchandise designed to appeal to a broader customer base. Private-label fashion brands Scoop and Free Assembly posted triple-digit comparable-sales gains, while back-to-college demand was strong for decor including candles, throws, rugs and lamps.

For the rest of the year, Walmart expects affordability to keep feeding the top line. It raised its full-year sales growth forecast to 4% to 5%, from 3.5% to 4.5%, and said it expects slightly stronger second-half sales than previously forecast as the price investments attract additional spending.