Walmart Inc. (NASDAQ:WMT) shares fell more than 9% Thursday after its finance chief warned that gasoline above $4 is changing how consumers spend, adding to concerns over the retailer’s weakest U.S. sales growth in more than six years.
"When fuel prices increase and get above $4, perhaps there’s a psychological impact to that," Chief Financial Officer John David Rainey told analysts. "Consumers are making trade-offs."
Walmart also expects fuel-related costs to run about $2 billion above its original forecast, Reuters reported.
Walmart Finds the $4 Pain Threshold
Higher gasoline prices hit Walmart twice: customers have less money left after filling their tanks, while the retailer spends more moving merchandise through its supply chain.
The pressure showed up at checkout. Growth in customer transactions slowed to 1.5% from 3% in the previous quarter, while average spending per transaction rose just 1.1%, down from 3.1% a year earlier.
Medicare-negotiated drug prices also weighed on sales, but higher fuel costs were squeezing shoppers before Walmart’s July price cuts had time to lift demand.
Iran Conflict Pushes Energy Shock Into The Economy
The pressure on Walmart shoppers comes as President Donald Trump escalates his confrontation with Iran.
Trump promised "Economic Warfare and Isolation on an unprecedented scale" Wednesday and threatened consequences for countries providing financial or commercial support to Tehran, Reuters reported.
Brent crude climbed toward $94 a barrel Thursday as investors weighed the risk that the conflict will keep disrupting Middle Eastern energy supplies.
Polymarket traders put the chances of Strait of Hormuz traffic returning to normal by Oct. 31 at around 15%. The odds of a U.S.-Iran nuclear deal by year-end stand at 11%.
The economic risk extends beyond Walmart: expensive fuel leaves households with less to spend elsewhere while raising transportation costs for retailers and suppliers.
Why Walmart’s Warning Matters
Walmart still beat earnings estimates and raised its annual sales forecast, but its third-quarter profit guidance fell short of expectations.
The retailer is cutting prices on 11,000 items and reinvesting nearly $2.9 billion in tariff refunds to support demand. Those measures may help, but they cannot control the price customers pay at the pump.
Until the Iran conflict eases, every extra dollar spent on gas is a dollar not spent elsewhere.
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