Walmart shares sank 8.6% Thursday after the retailer reported its slowest sales growth in more than six years as cash-strapped customers cut back on spending amid higher gasoline prices.

In the second quarter ended July 31, US comparable sales – at stores and digital channels open for at least 12 months – rose 2.6%, the smallest increase since 2020, the company said Thursday.

The Bentonville, Ark.-based retailer has been lowering prices after receiving a massive $2.9 billion tariff refund in an effort to win over hesitant shoppers, focusing on specific goods “where consumers were feeling pressure,” like beef, Walmart Chief Financial Officer John David Rainey said Thursday.

But lower-income shoppers have continued to cut back as they fork over a larger share of their pay at the gas pumps amid the Iran war, as global energy supply disruptions keep prices stubbornly above $4 a gallon.

“It appears there were choices between necessities within the quarter because of where gas prices are,” Rainey said.

Prices at the retail chain were still higher than last year due to higher costs, but the company is planning more discounts and the impact of these lower prices should be seen in the third quarter, he added. The company is still waiting on less than $100 million of the tariff refund to come in.

Walmart itself is expecting more than $2 billion of “incremental cost headwinds related to higher fuel prices this year,” he added.

Like many other retailers, though, Walmart continued to see resilient consumer spending among higher-income households – those that earn $100,000-plus annually – particularly on groceries, toys, fashion and private brands.

The company hiked its full-year sales and income forecasts on Thursday, optimistic about its ability to boost sales by further lowering prices.

Walmart now expects net sales to rise 4% to 5% for the full year, up from a previous estimate of 3.5% to 4.5%, and operating income to jump 7% to 8.5%, up from a range of 6% to 8%.

Michael Lasser, equity research analyst at UBS, said in a note Thursday that while “results were mixed,” the firm remains bullish on Walmart.

In the second quarter, Walmart said its US comparable sales were hurt by changes in pharmacy-pricing regulations and would have otherwise seen 3.4% growth – but this still would have missed analysts’ estimates of a 3.8% gain.

Walmart’s net sales jumped 5.9% to $186.1 billion, while net income plunged 9.4% to $6.37 billion.

In the meantime, the retailer is also undergoing a shift as shoppers increasingly move online, a concern for a company that has long raked in most of its profits at massive superstore locations.

Walmart’s US e-commerce sales rose by a whopping 24% in the second quarter. That figure includes its advertising-revenue business, where it sells ads that run in stores and on its website.

“The relevance of store comps, I think, is not as pertinent as it was a decade ago,” Rainey said. “We are not the Walmart of a decade ago.”

He noted, for example, that items ordered online and picked up at physical stores are counted as e-commerce sales, not store sales.

Walmart executives are discussing whether it makes sense to start reporting these sales differently to better reflect their new business model.