BENTONVILLE, ARK. — Large food manufacturers can expect more pressure from Walmart to bring down pricing as the world’s biggest retailer pursues further price rollbacks.

Price inflation in center-store food categories has lingered despite relaxed inflation in food overall, particularly in fresh foods, said Doug McMillon, president and chief executive officer of Walmart, in a conference call last week on the company’s second-quarter results. As a result, Walmart aims to push food manufacturers to ease pricing and to counteract potential increases, he noted.

“In dry grocery, processed food consumables are where inflation has been more stubborn,” McMillon said. “As we mentioned, we still have slight inflation even in the last quarter in the food categories. So, I’m hoping that what we see from our branded suppliers is investment in price, and we’re seeing that from some of them and not others. We have less upward pressure, but there are some (suppliers) that are still talking about cost increases. And we’re fighting back on that aggressively, because we think prices need to come down.”

Walmart US now has more than 7,200 price rollbacks in effect across categories. Though Walmart’s private labels have gained as consumers become more price-sensitive, McMillon said the retailer would like to see name brands sharpen their value offer to shoppers.

“We want to sell brands,” he said. “It’s important to Walmart to sell brands and show a value. So, we’re hoping that our branded suppliers do the right things with both quality and price to get to the value that our customers want to see. I would guess that private brand continues to grow, although it’d be OK with us if the percent of total leveled out for the reason that I just mentioned. Our teams are doing a better job with private brand as it relates to both the development of the product, the quality of it and the value. So that’s good and helpful for customers, and we’ll keep doing that.”

At Walmart US, second-quarter net sales rose 4.1% year over year, with comparable sales excluding fuel up a better-than-expected 4.2%. Customer transactions gained 3.6%, up from 2.9% a year ago, and average ticket size edged up just 0.6%, compared with 3.4% a year earlier.

Walmart’s strong quarterly results, however, present a “good news/bad news” scenario for “Big Food” companies, said TD Cowen analyst Robert Moskow.

“While it’s usually a good thing when a big customer is performing well, Walmart continues to pressure food vendors to improve their value proposition through price rollbacks,” Moskow said in an Aug. 15 research note. “This may pose a challenge to a company like Hershey, which recently announced a price increase to help offset higher input costs.”

As a group, the “Big 9” food companies — Campbell Soup, Conagra Brands, General Mills, Hershey, Kellanova, Kraft Heinz, McCormick, Mondelez and J.M. Smucker — have seen retail tracking volume decline 1.6% this year through July 27, based on NielsenIQ data, compared with a 0.7% uptick for the total food market and a 2.8% gain for private label, TD Cowen said.

“(Walmart) management said that food inflation has decelerated to 0.6%, but they continue to call on branded suppliers in dry grocery to invest more in price,” Moskow said. “In addition, they said that there are still some vendors ‘talking about’ cost increases (we suspect Hershey) and that they are fighting back aggressively.”

The second-quarter performance led Walmart to raise its fiscal 2025 guidance for net sales, adjusted earnings per share and operating income.

“So far, we aren’t experiencing a weaker consumer overall,” McMillon said in the earnings call.

But that doesn’t necessarily bode good news for packaged food vendors, Moskow said.

“In theory, Walmart’s strong overall trends should flow through to Big Food,” he said. “However, we expect pressure from Walmart for deeper price rollbacks to continue, especially in categories where Walmart can flex its private label merchandising (up 60 bps of share). Companies with muted cost baskets, strong productivity savings or limited private label exposure may have a competitive advantage in this backdrop.”

Walmart is “advocating for our customers,” John David Rainey, chief financial officer, said during the call. “We want to drive everyday low prices, and we’re not intending to achieve any of our margin performance by passing this along to our customers and (Sam’s Club) members in the form of higher prices.”