Tariffs aren't keeping Walmart from attracting shoppers and outpacing Target

The company, based in Bentonville, Arkansas, also raised its annual profit and sales outlook.

Walmart's results differed notably from those of rival Target, which on Wednesday reported another quarter of comparable sales declines. The Minneapolis-based company has struggled to find its footing as customers defect to Walmart and other stores where they think they will find greater bargains and increasingly, the same or better merchandise.

Target's board of directors named a 20-year company veteran on Wednesday to succeed CEO Brian Cornell when he steps down after 11 years in early 2026.

Walmart said its profitable e-commerce operations, advertising revenue and selection of products with high profit margins have given it flexibility to absorb extra costs from the range of tariffs President Donald Trump has put on foreign products.

Walmart CEO Doug McMillon told investors Thursday that the impact of tariffs also has been gradual enough to mute changes in consumer spending behavior. When the discounter raised prices on certain items, it's observed lower- and middle-income customers trading down to lower-priced options or foregoing purchases, he said.

The company will continue to see its costs increase as it replenishes inventory at post-tariff price levels, McMillion said.

"We're doing what we said we would do," he said. "We're keeping our prices as low as we can for as long as we can. Our merchants have been creative and acted with urgency to avoid what would have been additional pressure for our customers and members."

A growing list of companies, including Procter & Gamble, E.lf. Cosmetics, Black & Decker and Ralph Lauren, told investors in recent weeks that they planned to or already had raised prices because of tariffs, though modestly.

None of that has derailed consumer spending. Shoppers spent at a healthy pace in July, particularly at the nation's auto dealerships, as signs emerged that President Donald Trump's trade policies were taking a toll on jobs.

Some of that spending may have been shoppers buying furniture and other imported items to get ahead of expected price increases, analysts said.

On Tuesday, Home Depot, the nation's largest home improvement retailer, reported improved sales during its latest quarter as consumers remained focused on smaller projects. Like Walmart, Home Depot's performance missed Wall Street's expectations.

The Atlanta-based company also said shoppers should expect modest price increases in some categories as a result of additional costs from tariffs, which are taxes on imports. Home Depot reported comparable sales increase of 1.4% in line with what home improvement rival Lowe's reported on Wednesday.

But it's Walmart that serves as a barometer of spending given its outsized power in American retailing. The company maintains that 90% of U.S. households rely on Walmart for a range of products, and more than 150 million customers shop on its website or in its stores every week.

Walmart said in May that prices had started to increase in late April and got higher in May. But it said Thursday that it had introduced 7,400 price rollbacks, or temporary discounts, across the aisles in the latest quarter.

The company said it earned $7.03 billion, or 88 cents per share, for the three-month period that ended July 31. That compares with $4.50 billion, or 56 cents per share, a year ago.

Sales rose nearly 5% to $177.4 billion. Walmart's 4.6% growth in U.S. comparable sales during the second quarter was slightly higher than its first-quarter gain of 4.5%. Groceries and health and wellness items fueled the growth, the company said.

Global e-commerce sales rose 25%, above the 22% growth in the first quarter.

The retailer said roughly one-third of deliveries from its U.S. stores in recent weeks were orders requesting delivery in three hours or less, and 20% of those orders made it to customers in a half-hour or under.

Despite Walmart's solid quarter, its stock price was down 5% in early afternoon trading as its earnings per share came in below what analysts had expected. Analysts were expecting 73 cents per share on sales of $175.93 billion for the quarter, according to FactSet.

Per share results, excluding effects of charges related to certain legal matters and from business restructuring, was 68 cents, Walmart said.

One $450 million expense was tied to settlements over worker and shopper injury claims, Walmart said. A company spokesperson said the cost per claim was increasing but not the total number.

For the year, Walmart raised its per-share estimates to a range of $2.52 to $2.62, up from a previous estimate of $2.50 to $2.60. It said 2025 sales are anticipated to increase 3.75% to 4.75%, more than it projected in May.