Walmart absorbs $175 million fuel hit

Walmart said on May 21 that it absorbed about $175 million in higher-than-planned fuel costs in its most recent quarter rather than immediately pushing those expenses onto shoppers. The company disclosed the figure as it reported first-quarter fiscal 2027 results showing revenue rose 7.3% to $177.8 billion and U.S. comparable sales increased 4.1%, excluding fuel. John David Rainey, Walmart’s chief financial officer, told analysts the fuel hit affected both Walmart and its suppliers. Shares fell about 7% after the retailer issued a weaker-than-expected outlook for the current quarter and said sustained fuel pressure could show up in store prices. ### Where did the $175 million hit show up? Walmart said the $175 million reflected added fuel expense over the quarter, a cost that cut into profits even as sales remained solid. NBC News reported the company described those costs as “real impacts to cost of goods sold” for Walmart and its suppliers, citing Rainey’s remarks on the earnings call. (nbcnews.com) The quarter covered the 13 weeks ended May 1, 2026, according to Walmart’s earnings materials. The company said operating income rose 5.0% in the period, while global e-commerce sales increased 26%, helped by store-fulfilled delivery and advertising growth. ### Why didn’t shoppers see that cost immediately? John David Rainey told CNBC that higher tax refunds in the first quarter may have softened the effect of elevated gas prices on consumers. (nbcnews.com) He said those refunds likely helped mute some of the pressure that would otherwise have been more visible in shopper behavior. CNBC reported Rainey said that cushion is fading in the second quarter because tax refunds are “largely not coming in” now. (corporate.walmart.com) He said Walmart had built that expectation into its guidance for the current quarter. ### What did Walmart say about prices from here? Rainey told analysts that if the “current elevated cost environment persists,” Walmart would expect “somewhat higher retail price inflation in Q2 and the second half of the year,” according to NBC News. (cnbc.com) That was the clearest signal from the company that the fuel hit may not remain fully absorbed if higher transportation and supply-chain costs continue. NBC News also reported that Rainey linked the pressure to both Walmart’s own logistics costs and supplier costs, which can feed into merchandise pricing over time. The company did not announce a broad immediate price increase on May 21. ### What did the outlook tell investors? Walmart said it expects adjusted earnings per share for the year to be $2.75 to $2.85, below analysts’ expectations of $2.91, according to CNBC. (nbcnews.com) For the current quarter, the company forecast adjusted earnings per share of 72 cents to 74 cents, below expectations of 75 cents, while net sales are expected to rise 4% to 5%. CNBC reported the weaker-than-expected outlook raised new questions about how much pressure high gas prices are putting on U.S. consumers. Walmart’s shares dropped about 8% in morning trading, while NBC News said the stock fell more than 7% on the day. ### What was Walmart still saying about demand? Walmart said first-quarter sales were supported by e-commerce growth, store traffic and gains with higher-income households. (cnbc.com) Its earnings release said market share gains were driven by both grocery and general merchandise, and led by upper-income households. Rainey also told NBC News that lower-income shoppers were showing more strain. (cnbc.com) He said the number of gallons customers bought at Walmart fuel stations fell below 10 for the first time since 2022, which he called “an indication of stress.” ### What comes next in the next quarter? Walmart’s second-quarter guidance now sets the next benchmark for whether the company can keep absorbing higher fuel costs without broader price increases. (corporate.walmart.com) Rainey told CNBC that the effect of fading tax refunds and continued high gas prices is already built into that quarter’s outlook. The company’s next formal update will come with its second-quarter fiscal 2027 results, after the quarter for which Walmart forecast net sales growth of 4% to 5% and adjusted earnings per share of 72 cents to 74 cents. (nbcnews.com) (cnbc.com)