The chief of U.S. retail giant Walmart (WMT) said shoppers will continue to feel stressed into next year because of ongoing economic uncertainty.
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Doug McMillon, president and chief executive officer of the group, told investors at the Goldman Sachs (GS) Global Retailing Conference that consumers will still feel pressure for the rest of this year and into 2026 as President Trump’s tariffs fuel inflation and stir shopper uncertainty.
Customer Switching
“If you look at the middle to upper income levels, we’re seeing strong demand, and if you look at middle to lower, there has been a little bit of stress,” McMillon said. “We’ve seen behavioral change on items that have gone up in cost because of tariffs, where they’re switching from one item to the other.”
Walmart US recently posted second-quarter net sales up 4.8% year over year, reflecting strong growth in the grocery and health-and-wellness categories plus a 26% jump in e-commerce sales. Comparable sales excluding fuel gained 4.6%, aided by upticks in average ticket size and transaction count.
Price rollbacks have helped Walmart maintain its shopper value proposition, with the number of rollbacks in grocery up 30% versus a year earlier.
Tariff Plea
“U.S. inflation is low single digits; that doesn’t tell the whole story,” McMillon explained to investors. “If you look at what’s happened in the food categories, particularly prepared foods, processed foods, dry grocery, stuff like that, we’ve seen prices go up for multiple years now. So absolute pricing levels in food are higher than we want them to be and higher than what American families would want it to be.”
On tariffs he said that less than a third of what Walmart sells in the United States is imported. He said he hoped that the tariff strategy “gets settled sooner rather than later” and at lower rates than are being levied currently by the U.S. government.
Last month, the University of Michigan consumer sentiment for the U.S. dropped to 58.2 from the five-month high of 61.7 in July. It was the first drop in the sentiment gauge in four months, mainly due to growing inflation concerns and sharply worse buying conditions for durable goods, which fell to their lowest in one year.
In ordinary terms that means shoppers deciding it is the wrong time to buy big-ticket items like electronics.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 29 Buy ratings. Its highest price target is $127. WMT stock’s consensus price target is $114.07, implying a 12.99% upside.
