Walmart reports mixed results as gas prices drag on US sales growth

US comparable sales, a closely watched benchmark, grew by 2.6 percent compared with 4.1 percent in the first quarter, a slowdown that weighed on shares.

Walmart also cited a negative effect from a price cap on 10 top-selling pharmaceutical products due to new US rules that went into effect January 1.

Executives said they were committed to lowering prices, noting that the company executed more than 11,000 "rollbacks" -- or price cuts -- in the quarter.

We're "seeing some incremental pressure on the consumer relative to the beginning of the year with higher fuel prices," Chief Financial Officer John David Rainey said on a conference call with analysts.

"It's why we have leaned so heavily into lower prices," said Rainey. "We're not managing our business for one quarter. We're managing our business on a multi-year basis to play to win."

Walmart too is facing a hit from the jump in energy prices, estimating a $2 billion drag in fuel costs for all of 2026.

"There's a limit to what companies can absorb," Rainey told CNBC, alluding to the $2 billion impact.

"We've done our best to try to handle that within the mechanisms that we have to offset that," Rainey said. But "higher oil prices is likely going to translate into higher prices for the consumer if it sustains at this level."

For the second quarter, Walmart reported profits of $6.4 billion, down 9.4 percent from the year-ago quarter. 

Revenues were $187.9 billion, up 5.9 percent from the year-ago period as Walmart raised its full-year profit and sales forecast.

As with other recent quarters, Walmart said US results were lifted by market share gains across income categories but led by upper-income households.

The company also pointed to a boost from new businesses such as membership and advertising.

- Are consumers struggling? -

Walmart described growth in grocery sales as stronger than in health and wellness or "general merchandise," which includes discretionary items such as fashion. 

Adding to the hit from the new pharma price rules, Walmart also experienced slower growth in the second quarter in sales of GLP-1 diabetes and weight loss products.

But executives said they were pleased with the underlying business around pharma, noting growing market share and that health and wellness customers tend to spend more than the average Walmart customer.

GlobalData Managing Director Neil Saunders called the results "another set of strong" quarterly figures, but noted that the US comparable growth was the slowest in six and a half years.

"Given the significant role Walmart plays in the lives of many Americans, the deterioration will set some alarm bells ringing over whether the consumer is running out of steam," Saunders said.

"It also raises the question as to whether the helpful gains from more higher income shoppers migrating to Walmart are starting to fade," he wrote.

"We think both things are true, in part, but should not be dramatically overstated at this point."

Shares fell 9.4 percent in mid-morning trading.

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