Walmart is putting billions of dollars from tariff refunds back into price cuts, aiming to win over shoppers who remain under pressure from elevated costs and broader affordability concerns.
The Arkansas-based retail giant, which released quarterly results Thursday, has collected “substantially all” of the $2.9 billion in tariff refunds for which it qualified, executive vice president and chief financial officer John David Rainey told investors on the company’s earnings call.
Rainey said Walmart is channeling those funds into customer-focused investments, with grocery and general merchandise at the center of the effort. The strategy follows the company’s July move to reduce prices on thousands of items, including beef, Coca-Cola and laundry detergent.
“We’re investing heavily in price because customers need us to and because we believe it drives market share gains over time,” Rainey said Thursday.
Walmart reported Thursday that second-quarter operating income climbed nearly 30% from a year earlier, helped in part by the tariff refunds. Still, investors focused on a slowdown in U.S. comparable sales growth, the weakest in six years, and Walmart shares fell 9% in morning trading.
Comparable sales at U.S. stores — a key metric that includes sales from locations open at least one year as well as online sales connected to those stores — increased 2.6% in the second quarter, down from 4.1% growth in the first quarter.
Where will tariff refund money go?
Neil Saunders, managing director and retail analyst at GlobalData Retail, said Walmart’s access to the tariff-related cash gives it room to sharpen prices on everyday necessities and reinforce its position as an “Everyday Low Price” retailer.
“Wider investments will include things like improved stores, which is something that Walmart has been working on for a while,” Saunders added.
The price reductions are part of Walmart’s strategy to attract shoppers as higher fuel prices from the Iran war put pressure on its customer base. The company delivered 11,000 rollbacks, temporary price cuts, in the second quarter, compared to 7,200 in the first quarter, Walmart president and CEO John Furner said on Thursday’s earnings call.
Walmart, along with other businesses, is receiving refunds after the Supreme Court in February struck down tariffs the Trump administration imposed under the International Emergency Economic Powers Act, or IEEPA.
As of July 31, the U.S. government had refunded approximately $100 billion in IEEPA tariffs, according to a court filing issued earlier this month.
Aimee Picchi
contributed to this report.
