Walmart (WMT) shares fell sharply Thursday after the retail giant posted its slowest U.S. comparable sales growth in years, unsettling investors despite a headline earnings beat.
Shares dropped 7.3% to around $105 shortly after markets opened, marking the stock’s largest intraday loss since May 21.
The company reported $187.9 billion in quarterly revenue and earnings per share of $0.81, both topping FactSet consensus estimates of $186.6 billion and $0.74 respectively.
Despite the earnings beat, U.S. comparable sales grew just 2.6% for the quarter, the slowest quarterly growth since Q4 2020, dragged down by headwinds in the pharmacy segment.
The pharmacy business faced a 0.8% headwind tied to federal drug price negotiations under Medicare, which reduced revenue even as prescription volumes continued to climb.
Chief Financial Officer John David Rainey told Bloomberg that drug negotiations impacted Walmart’s business more than expected and the issue will likely persist into next year.
The company specifically cited a roughly 900-basis-point impact from maximum fair price provisions under the Inflation Reduction Act, which allows Medicare to negotiate prices for certain prescription drugs.
GLP-1 weight-loss and diabetes medications were called out specifically, with Walmart noting that lower prices more than offset rising prescription volumes, meaning more customers filled scripts but the total pharmacy revenue still declined.
Excluding health and wellness, Walmart’s core merchandise comparable sales increased a healthier 3.4%, suggesting the underlying retail business remains relatively stable.
The quarter delivered a 24% rise in U.S. e-commerce sales, fueled by store-fulfilled delivery, advertising revenue, and online marketplace growth, offering some optimism for the company’s digital strategy.
Transaction growth, however, slowed to 1.5% from 3%, a signal that lower-income shoppers are making fewer visits to stores even as higher-income consumers increasingly trade down to Walmart.
Walmart is eligible to receive $2.9 billion in tariff refunds but has collected less than $100 million of that total so far, with recovered funds expected to be used to lower consumer prices.
Rainey also told CNBC that Walmart anticipates $2 billion in “incremental cost headwinds related to higher fuel prices” in 2026, adding another layer of uncertainty to the company’s outlook.
Management’s third-quarter guidance disappointed Wall Street, with projected earnings per share of 62 to 64 cents falling well short of the Street’s expectation of 68 cents.
Quarterly sales growth guidance of 3% to 3.75% also trailed analyst forecasts of 4.9%, raising concerns that consumer spending momentum may be fading.
Walmart did raise its full fiscal year net sales outlook to a range of 4% to 5%, up from its prior range of 3.5% to 4.5%, and lifted its adjusted earnings-per-share range to $2.80 to $2.87 from $2.75 to $2.85.
Because Walmart’s results are widely viewed as a proxy for broader consumer health, the report drew outsized attention, with Rainey noting that customers are “still spending” despite higher gas prices.
