Walmart Inc. reported increases in second-quarter profits and sales Thursday, as shoppers flocked to the retailer seeking low prices on groceries and other essentials, helping offset concerns that new U.S. tariffs might push prices higher. The nation’s largest retailer also raised its annual profit and sales outlook, while quarterly results from Walmart and other major U.S. retailers this week provide insight into how consumers are responding to potential tariff-driven cost increases.

Based in Bentonville, Arkansas, Walmart said it earned $7.03 billion, or 88 cents per share, for the three months ending July 31, up from $4.50 billion, or 56 cents per share, a year earlier. Sales rose nearly 5% to $177.4 billion. Other major companies, including Procter & Gamble, E.lf. Cosmetics, Black & Decker, and Ralph Lauren, have recently told investors they plan to or already have modestly raised prices due to tariffs. Despite these pressures, consumer spending remained strong in July, particularly at auto dealerships, with some shoppers preemptively purchasing imported goods to avoid expected price hikes.

Home Depot, the nation’s largest home improvement retailer, reported improved sales during its latest quarter, though like Walmart, it fell short of Wall Street expectations. The company warned that modest price increases may occur in some categories due to tariffs, which are taxes on imports. Target, meanwhile, reported another quarterly decline in comparable sales and said it would raise prices only as a last resort. Chief Commercial Officer Rick Gomez emphasized that shoppers are seeking value, prompting a focus on more affordable store label brands.

Walmart continues to serve as a key barometer of U.S. consumer spending, given its reach: 90% of households rely on the retailer for a wide range of products, and more than 150 million customers shop in its stores or online each week. Walmart noted that prices began increasing in late April and continued into May, but it also implemented 7,400 price rollbacks, or temporary discounts, across stores in the latest quarter. U.S. comparable sales, which include both physical stores and online channels, rose 4.6%, slightly above the 4.5% gain in the fiscal first quarter, driven by groceries and health and wellness items. Global e-commerce sales grew 25%, up from 22% in the previous quarter.

Despite a solid quarter, Walmart’s stock fell more than 2% early Thursday, as earnings per share came in below analyst expectations. Analysts had projected 73 cents per share on $175.93 billion in sales, while Walmart reported 68 cents per share, excluding certain legal and restructuring charges. For the current quarter, the company expects earnings per share between 58 and 60 cents, slightly above analysts’ 57-cent estimate. For the full year, Walmart raised its per-share forecast to $2.52–$2.62, up from $2.50–$2.60, and anticipates 2025 sales growth of 3.75% to 4.75%, exceeding its May projections.