Retailers are Handling Tariff Refunds in Very Different Ways: Walmart and Home Depot

Walmart Inc. (NASDAQ: WMT ) and The Home Depot, Inc. (NYSE: HD ) are both booking real tariff refund windfalls, but reporting and using the money in noticeably different ways, CNBC reported.

Walmart CFO John David Rainey said the company is eligible for roughly $2.9 billion in refunds, has yet to receive just under $100 million of that, and saw Walmart U.S. gross profit grow 1.6% from the boost; Rainey said Walmart plans to use the funds to lower prices for consumers, with the impact showing up in the current fiscal third quarter.

Home Depot said it received $730 million in tariff refunds during its fiscal second quarter, using about $685 million to reduce the cost of goods sold, lifting gross margin by 0.3 percentage points. CFO Richard McPhail called that "the vast majority" of what the company expected. Lowe's Companies, Inc. (NYSE: LOW ), by contrast, said it would not use its refund to cut prices, with CEO Marvin Ellison saying the company wants to "deliver strong profitability for our shareholders" instead.

Walmart Inc. (NASDAQ: WMT ) can turn its tariff refund into both lower prices and solid sales. The firm expects roughly $2.9 billion in tariff refunds and has already used part of the benefit to lower prices on about 11,000 products. Walmart can attract price-sensitive shoppers and increase traffic. It can also strengthen its market share if those lower prices generate more purchases.

The Home Depot, Inc. (NYSE: HD ) has taken a consumer-focused approach to its tariff refund while still protecting its margins. The company expects to receive roughly $730 million in tariff refunds and plans to apply about $685 million toward its cost of goods. That approach gives Home Depot room to pass savings to customers while retaining a financial benefit, potentially helping it compete more aggressively for home-improvement spending.

Tariff refunds give retailers more flexibility as tariffs continue to affect their costs and consumers remain sensitive to prices. Walmart and Home Depot can use the refunds to support lower prices and stimulate demand, while other retailers can direct the money toward profits, investments, or shareholder returns. If retailers reinvest the refunds effectively, they can turn a one-time cash benefit into higher sales, stronger market share, or improved near-term profitability.

Tariff refunds will provide only a temporary earnings boost rather than a recurring improvement in profitability. Once retailers use the refunds, they cannot rely on the same windfall in future quarters. Retailers that pass the savings to customers also sacrifice some of the immediate margin benefit, so they must generate enough additional sales to turn the refunds into a lasting advantage.