Walmart reported strong first-quarter results on Thursday, but a closer look shows a more complex picture. Revenue increased by 7.3% to $177.8 billion, and U.S. same-store sales rose 4.1%, thanks to growth in eCommerce and membership fees. While these gains are significant, U.S. consumers are also facing growing financial pressure. Here’s what Walmart’s results suggest about the direction of American household spending and why the company’s outlook did not meet expectations.
Higher-income shoppers are making most of the purchases. Walmart’s chief financial officer said that wealthier customers, who have seen their wages and investments grow, are spending more across different categories. In contrast, lower-income households are struggling. Rising prices for food, housing, utilities, and child care are making it harder for them to manage their budgets, and these challenges are likely to get worse.
Fuel prices are putting pressure on both shoppers and Walmart. On Thursday, the national average for regular gasoline was $4.56, much higher than the $2.98 average before the Iran war. Diesel was $5.66, about $2 more than at the start of the conflict. Walmart said higher fuel costs have reduced some of its income gains, and its chief financial officer warned that as tax refunds end, consumers will feel the impact of rising fuel prices even more in the coming months.
April inflation came in at 3.8%, its highest level in nearly three years, and consumer prices outpaced wage growth for the first time since 2003. Economists have flagged that the full economic impact of the Iran war has yet to filter through to household budgets, suggesting conditions could worsen before they improve.
Walmart’s guidance for the current quarter came in below analyst expectations, reflecting caution about the consumer environment ahead. The company also noted that its guidance does not account for any impact from potential tariff refunds, following a Supreme Court ruling against certain tariffs earlier this year. Citi analysts estimate Walmart could receive more than $10 billion in refunds, a figure that could provide a meaningful financial tailwind if it materializes.
Amazon recently became the world’s largest company by revenue, moving ahead of Walmart. This change highlights the growing gap between the two companies and increases the pressure on Walmart as it invests in artificial intelligence and works to become more of a technology-focused retailer.
