Walmart has pledged to put its Walmart tariff refund to work cutting prices for shoppers, after the retailer revealed it is eligible to receive roughly $2.9 billion in refunds following a legal ruling that overturned a raft of US import duties. The announcement came alongside quarterly results that beat Wall Street forecasts and a raised full-year outlook.
The refunds stem from tariffs that were struck down by the US Supreme Court. According to CBS News, the Supreme Court ruled in February that tariffs the Trump administration had imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. IEEPA is a federal law that grants a president broad powers to regulate commerce in a national emergency. As of 31 July, the US government had refunded approximately $100 billion in IEEPA tariffs across all claimants, according to a court filing issued that month.
How Walmart plans to use the Walmart tariff refund
Chief financial officer John David Rainey told CNBC that, of the $2.9 billion Walmart is eligible to receive, the company had so far got back less than $100 million. He said Walmart plans to use those funds to lower prices for consumers, with the impact expected to show up in the third quarter. ‘We feel really good about the progress we’re making,’ Rainey said.
The retailer had already been cutting prices before the refund money arrives. According to The Hill, Walmart delivered more than 11,000 rollbacks, which are temporary price reductions, across its US business in the second quarter. That was up from 7,200 in the first quarter, suggesting the pace of price cuts has been accelerating. Rainey said the company is lowering prices across categories, including beef, as it sees consumers under pressure from high fuel and food costs.
Walmart is not alone in receiving a refund. ABC7 Los Angeles reported that rival retailer Target said its own IEEPA tariff refund came to $994 million, giving a sense of the scale of money now flowing back to major US retailers.
Quarterly results: sales up, shares slip
For the three months ending 31 July, Walmart reported total revenue of $187.94 billion, up from $177.40 billion in the same period a year earlier. Net income came in at $6.37 billion, or 80 cents per share, compared with $7.03 billion, or 88 cents per share, the previous year. On an adjusted basis, earnings per share were 81 cents. The company’s gross profit rate grew to 25.4%, boosted in part by the tariff refund benefit.
Revenue rose 5.9% overall in the quarter. E-commerce sales jumped 23% globally, while US comparable sales, a measure that strips out new store openings, grew 2.6%. That comparable-sales figure was held back by a 0.8 percentage-point drag from the health and wellness segment, where price caps on certain drugs took effect. The 2.6% figure also fell short of the 3.5% increase analysts surveyed by LSEG had expected.
In the US, net sales reached $125.2 billion, up from $120.9 billion a year earlier. Internationally, Walmart recorded $35.2 billion in net sales, compared with $31.2 billion in the prior-year period. Sam’s Club US posted net sales of $25.7 billion for the quarter, up 8.8%, with membership fees climbing 6%. Companywide membership fee revenue jumped 17%, with net additions for the Walmart+ subscription service hitting a high for a second quarter. Global advertising revenue climbed 38%.
Despite the upbeat trading update, Walmart shares fell roughly 5% in premarket trading on Thursday. Rainey also cautioned that the company expects to face just over $2 billion in what he described as ‘incremental cost headwinds related to higher fuel prices this year’.
For the third quarter, Walmart guided for net sales growth of between 3% and 3.75% and adjusted earnings per share of between 62 cents and 64 cents. For the full year, it now expects net sales to grow between 4% and 5%, up from a previous forecast of between 3.5% and 4.5%, and adjusted earnings per share of between $2.80 and $2.87, compared with prior guidance of between $2.75 and $2.85.
Rainey acknowledged that many shoppers remain stretched. ‘Consumers are still spending, and real wage growth is keeping pace, and so they’ve been very resilient in this environment,’ he told CNBC. ‘But all that said, we would love to be able to bring prices down more and see less pressure on their wallets.’ The arrival of the remaining tariff refund money in the third quarter will be the clearest test of whether that ambition translates into meaningfully lower shelf prices.
