Walmart's earnings report, while not perfect, shows its winning strategy as tariffs pinch

The big box retail store Walmart's earnings report on Thursday, while not perfect entirely, was substantially indicative of a positive trend in the company as tariffs begin to pinch other companies.

A front view of a Walmart store.

In Q2, the earnings report for Walmart showed that American same-store sales grew 4.6%, far above the 4.2% expected by most analysts according to Bloomberg, and slightly higher than the 4.5% increase from Q1. With this piece of information alone, the earnings report seems very well for the store which has faced competition from Costco Wholesale, Target, and other massive retailers.

However, what broke the deal for investors in the earnings report was the earnings per share metric (EPS) $0.68, which was below the investor expectation of $0.74, once again according to Bloomberg. This caused the stock to fall albeit quite narrowly, just about 4.5% throughout the day.

Nevertheless, the first metric which positioned Walmart well - U.S. same-store sales - highlights its growing dominance over the consumer base as tariffs begin to inflict harm on price growth. Due to growing inflation indicated from the July PPI, CPI, and other data points, other companies have begun increasing prices, thus passing the price onto consumers. But, Walmart did the opposite, keeping prices stable to give an affordable option to consumers facing pressure across the economy.

"With regards to our U.S. pricing decisions, given tariff-related cost pressures, we're doing what we said we would do," stated Walmart Chief Executive Officer Doug McMillon on the company's earnings call right when the report released.

"We're keeping our prices as low as we can for as long as we can... As it relates to what we're experiencing with customers and members here in the U.S., their behavior has been generally consistent. We aren't seeing dramatic shifts."

This affordability has and will benefit the company as inflation rises. Behemoth-sized companies like Walmart, unlike smaller businesses, are better equipped to maintaining price levels than the latter due to their sheer financial resources.