Walmart Warns of Slowing Sales as High Gas Prices Squeeze U.S. Shoppers

BBC Business reported Thursday that retail giant Walmart has warned rising fuel prices are pushing U.S. consumers to pull back on spending. The company expects its sales growth rate to decelerate meaningfully in the coming months. Walmart fuel prices are now a central concern in the retailer’s forward guidance.

Pump Pain Hits the Checkout Lane

Walmart’s finance chief John David Rainey told CNBC that the average American gallon of gasoline has reached $4.56, according to motoring group AAA. That compares to roughly $3.00 before the ongoing conflict with Iran began disrupting global oil markets. Rainey said the squeeze on household budgets will intensify in the current quarter as the cushion from elevated tax refunds fades. He described the tax-refund effect as having temporarily masked fuel-driven financial stress for shoppers.

The retailer now expects quarterly sales growth of between 4% and 5% for the May-to-July period. That is a sharp step down from the 7.3% year-on-year growth it recorded in the February-to-April quarter. Walmart shares fell 7% on Thursday morning after the guidance disappointed investors.

A Record Quarter Before the Warning

Despite the cautious outlook, Walmart posted a strong first quarter. Net profit reached $5.3 billion for the period, an 18.8% increase over the same stretch a year earlier. Total revenue climbed to $177.8 billion. The results reflect a consumer base that had not yet fully absorbed the fuel shock now bearing down on household finances.

Background: Iran War Disrupts Energy and Supply Chains

The conflict with Iran has sent wholesale oil prices sharply higher and restricted shipping through the Strait of Hormuz. That chokepoint handles a significant share of global energy flows. Rainey warned investors that a prolonged closure of the strait could force Walmart to raise food prices due to supply constraints on fertilisers, nitrogen, and phosphates. The knock-on effects of disrupted energy trade are therefore reaching well beyond the pump.

Also Read: U.S. Inflation Jumps to 3.8% as Energy Costs Surge

Consumers Still Seeking Value

Analyst Danni Hewson of AJ Bell noted the irony in Walmart’s position. She said cost-pressured shoppers are likely to lean even harder into value-focused retailers like Walmart. The chain has pursued an aggressive price-cutting strategy over the past year, which may cushion the blow to foot traffic even as total spending per household declines. That dynamic could limit the damage to Walmart relative to higher-priced competitors.

Read Next: Oil Price Predicted to Remain Above $100 for Rest of Year