Walmart, the world’s largest retailer, is facing mounting challenges as tariffs imposed by the Trump administration drive up the cost of imported goods, yet the company continues to attract a broad spectrum of American shoppers seeking value amid economic uncertainty. On August 21, 2025, Walmart reported its second-quarter results, revealing that consumers across all income levels are still flocking to its stores, even as the retailer’s profit margins have been squeezed and inventory costs have risen.
The company’s revenue for the second quarter reached $177.4 billion, surpassing analyst expectations of $176.16 billion, according to LSEG data reported by The Wall Street Journal. However, adjusted earnings per share came in at 68 cents, falling short of the anticipated 74 cents. This earnings miss—Walmart’s first in more than three years—sent shares down 4% in midday trading, even as the company raised its fiscal year sales and profit forecasts.
CEO Doug McMillon addressed the growing cost pressures in a call with analysts, stating, “As we replenish inventory at post-tariff price levels, we’ve continued to see our cost increase each week.” He added that these rising costs would persist into the third and fourth quarters of the year, a sentiment echoed in an employee video where he noted, “Our profit performance wasn’t what we wanted this quarter.”
Despite these headwinds, Walmart’s strategy of absorbing some of the tariff-related costs has helped keep price increases at its stores lower than the national average. According to The Wall Street Journal, the company is also using grocery discounts, fast shipping on delivery orders, and an improved fashion lineup to lure customers. Its global e-commerce sales jumped 25% during the second quarter, with one-third of deliveries from stores completed in three hours or less.
Walmart’s approach has paid off in customer loyalty and traffic. The company’s total U.S. comparable sales rose 4.6%, outpacing analyst estimates of a 3.8% increase. Sales at U.S. stores open at least one year jumped 4.8%, and Walmart gained market share across all income groups, particularly among upper-income households—those earning over $100,000 annually—who have been increasingly drawn to Walmart’s promise of value as tariffs threaten to push prices even higher.
Middle- and lower-income households, meanwhile, are feeling the pinch more acutely. McMillon explained that these shoppers are making “noticeable adjustments” to their buying habits in response to rising prices, either by reducing the number of items in their baskets or by opting for private-label brands. “Value is still en vogue. That’s the key message from Walmart,” Neil Saunders, managing director of GlobalData Retail, told CNN. “Broad consumer and macro trends remain favorable to Walmart, especially in the shape of consumers wanting to maximize bang for their buck.”
Still, the impact of tariffs is being felt. Approximately one-third of Walmart’s U.S. merchandise is sourced from overseas suppliers, leading to about a 10% price increase on imports, with Walmart absorbing much of the remainder of the cost. As Chief Financial Officer John David Rainey explained to The Wall Street Journal, “We’re going to continue to try to navigate this on an item-by-item, category-by-category way to minimize the impact on the consumer.” The company has also placed early orders on products it expects to sell well and is cutting back on higher-priced items that carry steeper tariff costs.
The tariff situation remains fluid. President Donald Trump initially announced tariffs in April 2025, briefly paused them after market turmoil, and then, on August 11, announced another 90-day delay on tariffs against China as trade negotiations continue. Yet, the threat of higher import levies looms large for all retailers. According to an S&P Global survey cited by Al Jazeera, input prices paid by businesses hit a three-month high in July, with companies naming tariffs as the main culprit. Prices charged by businesses for goods and services reached a three-year high as companies passed along these costs to consumers.
Walmart’s ability to weather these challenges better than competitors is partly due to its scale and product mix. More than half of Walmart’s sales come from groceries and other essentials, which helps keep customer traffic steady even as shoppers cut back on discretionary purchases. In contrast, Target, which imports about 50% of its merchandise compared to Walmart’s 33%, has had to raise prices at almost double the rate to offset tariffs. Target reported its third consecutive quarter of declining sales and saw its shares tumble 6%, with CEO Brian Cornell announcing he will step down early next year.
Walmart also faces internal cost pressures unrelated to tariffs. The company reported a $450 million charge related to settlements for worker and customer injury claims in the latest quarter. Executives noted that while the number of claims has not increased, the cost of settling them has risen. McMillon used the occasion to remind employees of the importance of safety, saying, “As always, we should all stay focused on safety, whether that’s preventing slips and falls, by keeping our aisle clear or making sure our equipment is used properly.”
Looking ahead, Walmart raised its fiscal year sales growth forecast to a range of 3.75% to 4.75%, up from its previous projection of 3% to 4%. Adjusted earnings per share are now expected to fall between $2.52 and $2.62, slightly higher than earlier estimates. Rainey said the company is considering more possible financial outcomes than before, given the ongoing trade policy talks and uncertain demand environment.
Despite the current challenges, Walmart’s stock remains up nearly 30% over the past year and a half, even after the recent dip. The retailer continues to outperform rivals like Target and Home Depot, thanks to its focus on value, its ability to absorb cost pressures, and its rapid adaptation to changing consumer behaviors.
Industry analysts and executives agree that as long as economic uncertainty persists and tariffs remain a factor, Walmart’s scale and strategic flexibility will likely keep it in a strong position. For now, American shoppers—whether pinching pennies or simply looking for a good deal—are keeping Walmart’s registers ringing, even as the company braces for more bumps in the road ahead.
