Walmart says American consumers are increasingly feeling the strain of rising living costs, even as the retail giant posted strong quarterly sales growth.
The company reported first-quarter revenue of $177.8 billion, a 7.3% increase from the previous year, while same-store U.S. sales rose 4.1%. Walmart said growth in eCommerce operations and membership fees helped boost results, with higher-income shoppers driving much of the spending increase.
Despite the positive numbers, Walmart issued weaker-than-expected guidance for the current quarter, signaling concerns about economic conditions and consumer spending power.
The retailer pointed to soaring fuel prices as a major challenge affecting both households and corporate profits. According to AAA data cited in the report, average gasoline prices have climbed sharply since the outbreak of the Iran war, reaching $4.56 per gallon nationwide, while diesel prices averaged $5.66.
Walmart Chief Financial Officer John David Rainey said temporary relief from tax refunds had helped soften the impact on consumers, but warned that pressure could intensify as those refunds fade.
“I think consumers are going to feel more of that pressure from higher fuel prices,” Rainey said in an interview with CNBC.
Economic concerns have also grown after inflation reportedly rose to 3.8% in April, its highest level in nearly three years. Consumer prices have now outpaced wage growth for the first time since 2003, raising fears that many Americans are struggling to keep up with rising costs for food, housing, transportation and childcare.
Walmart’s results are closely watched because the company is considered a major indicator of U.S. consumer behavior and economic health.
The company is also facing growing competition from Amazon, which recently surpassed Walmart as the world’s largest company by revenue. Walmart has responded by increasing investments in technology and artificial intelligence to strengthen its retail operations.
Meanwhile, rival retailer Target also reported sales growth this week, though the company continues to battle operational and branding challenges.
Analysts say major retailers could also benefit from possible tariff refunds following recent court rulings involving tariffs introduced during the administration of President Donald Trump.