People are putting less gas in their tanks as high prices crimp budgets, Walmart says

MW People are putting less gas in their tanks as high prices crimp budgets, Walmart says

By Tomi Kilgore and Bill Peters

'That's an indication of stress,' Walmart CFO says, as Wall Street looks for signs of the Iran war's impact on consumers

Walmart's stock is falling as investors express disappointment in the retailer's earnings outlook.

As the Iran war pushes U.S. gas prices toward $4.60 a gallon, straining consumer budgets, Walmart shoppers are putting less fuel in the tank when they pull up to the pump.

Walmart is best known for its retail stores, but it also runs a lot of gas stations. And during the company's first-quarter earnings call on Thursday, Chief Financial Officer John David Rainey said that the average number of gallons shoppers put in their vehicles in the most recent quarter fell below 10 for the first time since 2022, when Russia's invasion of Ukraine drove up energy costs.

"That's an indication of stress," he said.

He also suggested more stress could be ahead, particularly for shoppers in Walmart's large grocery business.

"I think it's possible that if fuel prices persist at this level, you may see some upward pressure on average unit retail prices," he said.

Shares of Walmart were down 6.7% on Thursday, after the retail behemoth reported the slowest growth on a key sales metric in two years and provided a downbeat profit outlook for the current quarter.

Retailers and consumer-goods makers have tried to figure out where to eat higher costs and where to raise prices as the conflict in the Middle East gums up supply chains and raises the cost of materials they use to manufacture and package products. The conflict has disrupted the flow of oil and also raised prices for things like polyester, plastic and aluminum.

Rainey on Thursday noted that the cost of fertilizer - which has soared as the Strait of Hormuz closure disrupts the flow of key inputs like nitrogen and phosphates - could filter through to grocery prices. Groceries make up a majority of Walmart's sales.

The U.S. average gas price currently stands at $4.56 per gallon, according to AAA. The record high average price for regular unleaded gas was reached in June 2022, at around $5.02, according to the group.

Walmart executives in March said that when gas prices reach $4.50 to $5, consumers tend to cut spending. If a gallon of gas goes above $5, the analysts said, that would represent a "material drawback" in demand.

Walmart is facing "hundreds of millions of dollars of pressure" from higher fuel prices, Rainey said during Thursday's call. But even as Walmart shoppers put less fuel in the tank overall, more people filled up at the company's membership-based warehouse retail business, Sam's Club, as they hunt for discounts, he said.

Visits to Sam's Club and wholesale club rivals Costco $(COST)$ and BJ's $(BJ)$ rose through last month, according to a report from Placer.ai this week, as consumers continue to seek relief from price increases. That report added that "elevated fuel prices are adding another tailwind, driving increased traffic to wholesale club gas stations."

Walmart executives called out other gains on Thursday. They said higher tax refunds helped lift consumer spending. Higher-income shoppers, who have come by Walmart more often in recent years, also continued to spend.

They also highlighted "outsized growth" in the chain's fashion segment, which has become a bigger focus for the company. More people are also using Walmart's artificial-intelligence shopping assistant, as retailers try to get AI to work more smoothly for customers.

Looking ahead, Walmart expects adjusted earnings per share of 72 cents to 74 cents for its second quarter. That was below the current FactSet consensus of 75 cents.

The company maintained its full-year outlook for a range of $2.75 to $2.85. Walmart noted in February that over the previous three years, it had raised its earnings guidance.

Walmart's financials came after Target's results a day earlier also disappointed investors. Target (TGT) raised its sales outlook for the year, but Wall Street remained worried that its turnaround efforts might run up against tougher comparisons and a more difficult spending backdrop.

Walmart's stock is up 9.3% so far this year. Target shares have run up 24.5%, and the S&P 500 index SPX has gained 8.1%.

For the quarter to April 30, comparable sales for Walmart U.S. stores, or sales at stores open at least a year, rose 4.1% from a year ago, matching the average analyst estimate compiled by FactSet, as the number of transactions was up 3% and the value of the average transaction increased 1.1%. That was down from a 4.6% rise in the previous quarter and was the slowest year-over-year growth since the first quarter of 2024.

Walmart's total revenue for the latest quarter rose 7.3% to $177.75 billion, above the FactSet consensus of $174.89 billion, boosted by a 37% jump in its advertising business, 26% growth in e-commerce sales and a 17.4% rise in membership-fee revenue.

Net income was up 18.8% to $5.33 billion, while adjusted earnings per share, which excludes nonrecurring items, of 66 cents matched the FactSet consensus.

For Sam's Club, comparable sales grew 3.9%, beating the FactSet consensus of 3.3%, as transactions rose 6.2% but average ticket fell 2.2%.

-Tomi Kilgore -Bill Peters

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May 21, 2026 13:27 ET (17:27 GMT)

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