Kathmandu— Walmart experienced a slowdown in sales growth during the second quarter as rising fuel costs and broader economic factors prompted U.S. consumers to adjust their spending habits, according to the company’s latest earnings report released Thursday. Same-store sales rose 2.6 percent, falling short of analyst expectations and marking the weakest quarterly increase in six years. The Bentonville, Arkansas-based retailer attributed the slowdown to consumer trade-offs made in response to petrol prices exceeding $4 per gallon, alongside impacts from tariffs and geopolitical tensions.

Fuel Costs Drive Consumer Trade-Offs

Walmart’s Chief Financial Officer John David Rainey explained that rising fuel costs are influencing consumer behavior. “When fuel prices increase and get above $4, perhaps there’s a psychological impact to that … consumers are making trade-offs,” he said during an earnings call with analysts. The average price for a gallon of petrol reached $4.10 on Thursday, significantly higher than the $2.98 average when tensions in Iran began escalating. Walmart anticipates approximately $2 billion in incremental fuel-related costs beyond its initial projections.

Broader Economic Pressures Impact Retail Sales

The slowdown at Walmart mirrors a broader trend of softening consumer spending across the U.S. Overall retail sales dipped 0.6 percent in July, marking the largest decrease since May 2025, according to data from the US Commerce Department. Consumer inflation also ticked up slightly last month, with prices for essential items like fresh fruit, butter, and fish experiencing increases. This comes as consumers are spending more per checkout – 1.1 percent higher than the previous quarter – but still well below the 3.1 percent jump seen a year ago.

Walmart Responds With Price Cuts and E-Commerce Investment

In response to these pressures, Walmart announced price cuts on 11,000 items, partially funded by $2.9 billion in tariff refunds. However, the company cautioned that the full impact of these price reductions may not be immediately apparent in its earnings. While foot traffic to brick-and-mortar stores declined slightly, increasing by only 1.5 percent for the quarter compared to 3 percent previously, Walmart’s e-commerce sales surged by 24 percent in the US. As a result, the company has upgraded its forecast for net sales growth from 3.5–4.5 percent to 4–5 percent.

Mixed Results Among Big-Box Retailers

Walmart’s earnings report comes alongside mixed results from other major retailers. TJX, parent company of TJ Maxx and Marshalls, reported a slowdown in sales growth to 1 percent for the quarter, down from 6 percent previously. Analyst Dylan Carden of William Blair expressed concern that this decrease may be due to fewer purchases per shopping trip given broader signs of consumer weakness. Target, however, posted a net sales increase of 5.3 percent, driven by a 3.6 percent rise in in-store traffic and its own price cuts and tariff refunds.

Walmart’s stock experienced a significant drop on Wall Street following the earnings report, falling nearly 10 percent, while other big-box retailers saw more moderate declines.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.