Walmart Seeing Signs of Consumer Stress

Walmart is seeing signs of consumer stress at the pump, with shoppers buying less than 10 gallons of gas per trip on average — the first time that’s happened since 2022.

The discount retailer’s Chief Financial Officer John David Rainey called the drop “an indication of stress,” noting that while the headline consumer looks reasonably healthy, the pressure is uneven underneath.

Walmart reported strong sales growth for the quarter ended May 1, with U.S. comparable sales rising 4.1% from a year earlier. Sales increased across its major segments and online channels. Higher-income shoppers are turning to Walmart’s fast delivery options and premium selections in fashion and beauty, while the company said higher tax refunds helped offset the impact of rising fuel prices for lower-income customers.

The retailer said it plans to hold prices low to capture market share amid elevated fuel costs, which could pull more cash-strapped shoppers to its stores. However, it could raise prices later if fuel costs remain high. Walmart largely left its financial outlook for the rest of the year unchanged, disappointing some investors and contributing to a sharp 7.27% drop in its shares on Thursday.

The pattern is familiar for Walmart, which often gains during periods of economic strain as budget-conscious shoppers hunt for deals. U.S. consumer sentiment has recently hit record lows, worsened by higher gasoline prices. The national average for regular gas now stands at $4.56, up significantly from $3.18 a year ago, according to AAA.