Here’s the thing about Walmart—they’re usually the ones squeezing suppliers and keeping prices low. But this quarter, the Iran war’s oil chaos decided to squeeze them instead.
Walmart just reported that rising fuel costs hit their profit growth by $175 million last quarter. That’s not chump change. But here’s where it gets interesting: instead of immediately jacking up prices at checkout, they ate the loss. Why? According to CFO John David Rainey, it was about “reinforcing customer trust and supporting share gains over the long term.”
Translation: We’re betting that keeping you happy now is worth more than squeezing an extra nickel out of you today.
The problem? That bet might not last.
Rainey basically said on the earnings call that if fuel costs stay elevated through the rest of the year, Walmart will have no choice but to raise prices. They’re talking hundreds of millions in new energy costs. That’s real money, and even Walmart’s legendary cost-cutting can only absorb so much.
The numbers tell the story. Walmart pulled in $177.8 billion in revenue for Q1, up 7.3% year-over-year. US stores crushed it with 4.1% comparable sales growth, beating analyst expectations. Operating income hit $7.5 billion, up 5%. On paper, that’s solid. But that fuel impact? It dragged down operating income by a quarter of a percentage point. Doesn’t sound like much until you realize what that means in real dollars.
Here’s where it gets weird: Walmart’s new revenue streams—e-commerce, memberships, advertising—actually helped them hold the line on prices. They’re basically using their advertising business and online growth as a financial cushion to keep grocery prices stable. That’s a power move, but it also shows how much pressure they’re under.
The market didn’t love it. Walmart’s stock dropped about 7% when trading opened Thursday morning. Investors apparently prefer the version of Walmart that passes costs along immediately rather than the version that thinks about customer loyalty.
But there’s a subplot here that’s genuinely concerning. Sam’s Club—Walmart’s warehouse chain—saw comparable sales jump to 5.9%, partly because customers are flocking there for cheaper gas. That’s good news on the surface. Except Rainey dropped this gem: “The number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022. That’s an indication of stress.”
Translation: People are so worried about money that they’re buying less gas per trip. That’s not a sign of a healthy consumer.
Walmart’s guidance for next quarter came in at about $0.73 adjusted earnings per share—below the expected $0.75. Full-year outlook stayed the same but came in below expectations. The company’s basically saying: “We’re not bulletproof to what’s happening in the economy.”
That’s the real headline here. Walmart—the company that’s supposed to be recession-proof because people always need cheap stuff—is admitting it’s feeling the squeeze. If Walmart’s worried, maybe we should be too.
