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.
Bull Case
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.
Bear Case
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.
Walmart Inc. (NASDAQ:WMT)’s decision to lower prices creates execution risk because the company must generate enough additional sales volume to offset thinner per-unit margins. Walmart has already lowered prices on thousands of products, but the strategy will create lasting value only if those cuts increase customer traffic, sales, and market share rather than simply reduce profitability.
The different refund strategies also make retailers’ earnings harder for investors to compare. Walmart and Home Depot plan to use their refunds to support lower prices, while Lowe’s Companies, Inc. (NYSE:LOW)’s plans to return its refund to shareholders. These different choices can produce different earnings effects even when retailers face similar tariff costs, increasing the risk that investors mistake a one-time refund benefit for stronger underlying operating performance.
Hedge Fund Data
Insider Monkey’s database shows Walmart Inc. (NASDAQ:WMT) was held by 111 hedge funds in the second quarter of 2026, up from 99 in the first quarter, with total holdings valued at $11.12 billion. The Home Depot, Inc. (NYSE:HD) was held by 98 funds worth $11.68 billion, down slightly from 100. Among the retailers taking a different approach, Lowe’s Companies, Inc. (NYSE:LOW)’s was held by 69 funds worth $1.81 billion, up from 66, while Target was held by 63 funds worth $2.29 billion, down from 68.
Conclusion
Tariff refunds give Walmart, Home Depot and Lowe’s a meaningful but temporary financial opportunity, with each retailer pursuing a different strategy. Walmart and Home Depot can use the refunds to strengthen pricing and attract customers. Lowe’s can use its refund to support shareholder returns. However, the benefits will depend on execution, because retailers that cut prices must generate enough additional sales to offset lower margins. Investors should therefore view the refunds as a potential competitive advantage rather than a lasting improvement in profitability.
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