While many retailers across the U.S. are grappling with reduced consumer spending, Walmart has continued to perform strongly. In its fiscal first-quarter earnings report for 2026, the retail giant reported a 4.5% increase in U.S. comparable sales year-over-year. This growth was driven by both an uptick in the number of customer transactions and higher average spending per visit. The strong performance translated into a $5.7 billion U.S. operating income for the quarter, up 7% from the same period last year.
Walmart Sees Shift in Consumer Spending as Tariff Pressures Threaten Retail Margins
Walmart CEO Doug McMillon emphasized that the sales increase was not due to inflation, but to greater customer activity. However, he also noted a shift in what consumers are buying. While the health and wellness category saw significant gains, particularly in prescription and over-the-counter sales, general merchandise such as electronics, home goods, and sporting equipment saw declines. This indicates a more selective consumer base, likely responding to broader economic pressures.
Walmart Defies Retail Slowdown as Shoppers Shift Habits and Tariffs Threaten MarginsA major concern voiced during the earnings call was the impact of changing tariff policies under President Donald Trump. After a series of fluctuations, tariffs on Chinese goods were temporarily reduced from 145% to 30%. Despite this decrease, McMillon warned that Walmart will not be able to fully absorb the extra import costs, especially given the thin margins typical in retail. Walmart U.S. CEO John Rainey echoed these concerns, stating that certain imported items will likely become more expensive for consumers.
Walmart Shields Food Prices as Consumers Shift Habits Amid Inflation and Tariff Pressures
Despite the tariff-related challenges, Walmart is prioritizing keeping food and consumables affordable. McMillon underscored that food prices—already elevated in recent years—must remain accessible. However, tariffs on products from countries like Costa Rica and Colombia are affecting specific imported foods such as bananas, avocados, and coffee. Even as general merchandise might see price hikes, Walmart is working to shield essential food items from similar cost increases.
Amid rising prices and ongoing economic uncertainty, consumers are shifting how they shop. A survey by Numerator found that 83% of Americans are adapting to anticipated cost increases by hunting for deals, using more coupons, and steering clear of imported goods. These behavioral changes have impacted Walmart directly, with store visits falling 2.4% year-over-year in early 2025.
February and March saw especially sharp declines, but foot traffic surged by 4.5% in April, likely tied to Easter-related shopping. As inflation and tariffs continue to influence buying patterns and operational costs, Walmart remains focused on striking a balance between maintaining low prices and sustaining profitability.
