Walmart has reported another quarter of positive sales uplift, but analysts and investors are concerned about the less-than-encouraging pace of growth.

The retail giant delivered a 5.9 per cent increase in revenue to $187.9 billion (up 5.1 per cent in constant currency) in the second quarter ended July 31. While this was a solid improvement, comparable sales were up only 2.6 per cent, marking the smallest increase since 2020.

According to the Wall Street Journal, the 2.6 per cent growth was also below analysts’ estimates of a 3.8 per cent gain, which could be attributed to the fact that consumers continue to spend cautiously, especially when shopping at physical stores. The results caused the retailer’s stock to tumble 9 per cent on Thursday.

GlobalData MD Neil Saunders pointed to factors that hampered growth, such as maximum fair price regulation and general deflation in pharmacy, which created 125 basis points of negative pressure on the comparable figure. The fading impact of tax refunds also acted as a brake on growth across general merchandise. 

“Even so, 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. 

“It also raises the question as to whether the helpful gains from more higher-income shoppers migrating to Walmart are starting to fade. We think both things are true, in part, but should not be dramatically overstated at this point,” Saunders said.

At Walmart US, e-commerce contributed 5.1 per cent to the comparable numbers, which means that store comps are negative. 

“In some ways this doesn’t matter enormously as Walmart uses stores for most of its e-commerce fulfillment. However, it also underlines the increasing importance of the online battleground – especially to some of the new higher-income customers who use the channel extensively,” Saunders said.

At Sam’s Club, net sales grew 8.8 per cent, with comparable sales up 4.4 per cent. The analyst said some of the changes the business has made to delivery, including faster 1-hour slots, have helped drive engagement.

On the bottom line, operating income soared 28.8 per cent, but this includes the benefit of tariff refunds. Consolidated net income was down 8.7 per cent.

Looking ahead, the company expects net sales to increase 4-5 per cent for the full year, up from the prior guidance of 3.5-4.5 per cent.

Saunders flagged that sales will continue to moderate, suggesting that the heady days of expansion are fading even as Walmart remains on the front foot. 

• Further reading: ‘A solid start’: Walmart revenue climbs amid cost headwinds.