Walmart stock was heading higher Tuesday after the discount retailer said its grocery prices would be heading lower.
That's good that shares were up 1%, of course, but it's the way the rollout of the rollbacks unfolded. Walmart didn't get the news out first. President Donald Trump did, on Truth Social.
"Great news! I have just been informed that one of the biggest, best, and smartest Retailers in America, Walmart, will be lowering prices, by a lot, at my Administration's request to celebrate our great Country's 250th birthday," Trump posted on Monday.
Later, Walmart announced it would cut thousands of prices at both Walmart and Sam's Club stores. Ground beef, potato chips, and ice cream -- staples of the American cookout -- topped the list.
"Walmart is stepping up in a big and bold way, and other Retailers should follow the lead of these absolute Patriots," Trump wrote.
Putting aside questions about the White House pulling the strings at major companies, the move wasn't a surprise: Many expected Walmart would invest some of $3 billion in its expected tariff refunds in price cuts.
Wall Street was bracing for the cuts. Now there's another worry: More retailers are coming for Walmart's customers and would-be customers, those shoppers who are fed up with their weekly grocery bill getting bigger and bigger.
"Grocery will get even more competitive in the second half," writes Wolfe Research's Spencer Hanus. "With Kroger, Albertsons, Costco, and Dollar Tree (more visible $1 price points) all being very vocal about price investments, this announcement will heighten concerns about a price war."
Walmart price rollbacks were already up some 20% in the first quarter, he notes, and that's expected to accelerate in the coming quarters.
And Walmart's cuts are strategic.
For every 1% price gap that companies want to close with Walmart, they have to spend as much as $1.5 billion, Hanus estimates, so it "would take billions of dollars for the industry to fully close the gap."
That's not really feasible for most, so he expects that companies will look to lower prices on milk, eggs, and other staples to shift consumer perception more than anything. Kroger, he said, is making the biggest inroads.
The problem is that this all has the whiff of a no-win situation.
"Above all, deflationary pricing seems very much needed for the consumer, " writes David Bellinger of Mizuho Securities.
Yet, prices have come up so far so fast -- cumulative inflation since January 2019 stands at 33% overall -- that they aren't going down to where they were just a few years ago. And that's the rub with Americans, why they feel so crummy about the economy.
Lower prices will offer some relief, but not enough to lift anybody's mood. Retailers can win customers with price cuts, but changing minds -- and building loyalty -- takes time.
That goes some way to explain why Walmart has done so poorly of late. Though the stock is a long-term outperformer -- 139% over the past five years, nearly double the S&P 500 and leagues ahead of the State Street SPDR S&P Retail exchange-traded fund -- Walmart is barely break-even this year.
Wall Street has figured out that lower-income Americans don't have much wiggle room -- or much patience right now. They're not feeling very resilient right now.
In the positive column, Walmart has won over more six-figure earners, but they're less likely to be the top 10% fueling more than half of discretionary spending.
Investor hesitance will fade at some point, and Walmart isn't the same company it was just a few years ago. It has increased its revenue streams, stepped up on technology, and flexed its grocery muscle.
Now, the discounter is discounting again, helping solidify its value reputation. A shout out from the president doesn't hurt either.
The stock is going to have to run to catch up. And that's going to take time.
Write to Teresa Rivas at teresa.rivas@barrons.com
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(END) Dow Jones Newswires
July 10, 2026 21:31 ET (01:31 GMT)
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