Walmart says it will use a portion of the nearly $3 billion it has received in tariff refunds to help keep prices low for shoppers, a windfall that also gave the retailer's quarterly profit growth a significant boost.

The company said it "prioritized investment in price" after receiving the refunds, which were tied to tariffs imposed under the International Emergency Economic Powers Act (IEEPA).

The repayments stem from the Supreme Court's November 2025 ruling that the IEEPA tariffs, imposed by the Trump administration beginning in early 2025 on imports from China, Canada and Mexico and later extended more broadly, were not authorized by the 1977 law. The decision opened the way for U.S. Customs and Border Protection to refund duties that had already been paid, and other importers that paid IEEPA tariffs are due repayments under the same ruling.

The refunds arrived as Walmart continued leaning into its value proposition, pointing to more than 11,000 price rollbacks across its U.S. stores during the quarter.

"We're investing in prices because customers are looking to us for value," the company said in an earnings release.

The price investments mark a shift from earlier in the tariff dispute, when Walmart warned that import duties would force price increases and drew public pushback from President Donald Trump, who urged the retailer to absorb the costs.

Beyond pricing, the tariff refunds provided a substantial boost to Walmart's quarterly earnings. Adjusted operating income rose roughly 17% on a constant-currency basis, with the refunds contributing a 750-basis-point net benefit.

Excluding that benefit, Walmart said underlying operating income growth still reached the top end of its previous 7% to 10% second-quarter guidance.

Sales also continued to rise. Total revenue increased 5.9%, while comparable sales at Walmart U.S. grew 2.6%, excluding fuel.

Walmart's digital businesses posted faster growth. Global e-commerce sales increased 23%, including a 24% gain at Walmart U.S. and 26% growth at Sam's Club U.S.

Store-fulfilled delivery at Walmart U.S. jumped 40% during the quarter, while marketplace net sales increased more than 50%.

The retailer said stronger sales, improving business economics and continued investment in pricing and technology gave it the confidence to raise its sales and operating-income growth guidance for the year.

Walmart generated $19.7 billion in operating cash flow during the period, along with $5.5 billion in free cash flow.

The tariff refunds add another lever to Walmart's push to hold down prices as it competes for value-conscious shoppers while expanding its higher-growth e-commerce, marketplace and delivery businesses, where it remains the second-largest U.S. online retailer behind Amazon.

Because the refunds cover duties already paid rather than ongoing income, Walmart's next report, covering the holiday shopping quarter, will show whether the pace of rollbacks and its raised full-year guidance hold up without that one-time tailwind, a closely watched signal given Walmart's standing as the largest U.S. retailer and the country's biggest private employer.

Source: Fox Business