• by Sarah Mahoney , 3 hours ago

Walmart just reminded people why it’s the nation’s most-watched retailer: U.S. consumers are still spending, so long as they see value. The company’s grocery aisles attracted more affluent households seeking bargains, fueling market-share gains.

The Bentonville, Arkansas-based retailer says second-quarter sales rose in each business segment, with total revenues increasing 4.8% to $177.4 billion. A day after Target reported sales decline, Walmart said its comp store sales gained 4.6%, buoyed by sales increases in the mid-single digits in grocery and the mid-teens in health and wellness. Revenue at Walmart Connect U.S., the company’s retail ad network, jumped 31%. And global ad sales, which include Vizio, surged 46%.

Walmart also continues to notch gains in membership revenue, up 15.3%, proving that its Amazon Prime-like offer has growing appeal for shoppers eager to lock in lower prices as well as more ecommerce and delivery options.

“Despite consumers' financial constraints, Walmart posted solid top-line marks, illustrating the benefits of its scale, attractive price positions, and convenient digital shopping options,” writes Erin Lash, an analyst who follows the company for Morningstar.

She adds that the company’s ongoing investments in omnichannel innovations are paying off, with an acceleration of ecommerce gains. “Engaging customers digitally while keeping compelling pricing gaps should bode well for long-term customer retention.” It may be a “driving force” in the retailer’s newfound success with higher-income shoppers.

 Those solid quarterly results led Walmart to boost its forecast for both the third quarter and the full year, with sales in both reporting periods now expected to advance by between 3.75% to 4.75%.

While the results indicate that, so far, consumers aren’t scared off by rising prices due to tariffs, that may well change. In a conference call webcast for investors, Doug McMillon, president and CEO of Walmart, explained that the company is raising more prices each week due to the impact of President Trump’s trade war.

Walmart was one of the first companies to speak out against tariffs earlier this year, saying that even as it would do everything it could to absorb costs internally, it would eventually have to push higher prices out to its shoppers. At that time, McMillon’s remark provoked a swift rebuke from President Trump. “Between Walmart and China, they should as is said ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING,” Trump wrote. I’ll be watching, and so will your customers!”

“We’re doing what we said we would,” McMillon said in today’s call. “We're keeping our prices as low as we can for as long as we can.”

And so far, at least, consumers seem willing to eat their share of the tariffs. “We aren't seeing dramatic shifts… the impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted," said McMillon. "But as we replenish inventory at post-tariff price levels, we've continued to see our costs increase each week, which we expect will continue into the third and fourth quarters.”