Walmart – the nation’s largest private employer – warned of possible price hikes on Thursday given the uncertainty in the tariff environment.
“We will do our best to keep our prices as low as possible but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” Walmart CEO Doug McMillon said in a statement as the retailer reported its first quarter results, which met Wall Street expectations.
Consumers could see price hikes as soon as the end of May, Walmart Chief Financial Officer John David Rainey told CNBC.
Despite the tariff uncertainty, the company said it “will play offense” and may make strategic investments to strengthen its value proposition.
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This follows a recent meeting between McMillon and President Donald Trump to discuss ongoing trade negotiations and the impact of tariffs on imported goods. A Walmart spokesperson told FOX Business that the meeting was “productive” and that the company valued the opportunity to share its perspective. The U.S. reduced the “de minimis” tariff on cheap goods from China from 120 percent to 54 percent, according to an executive order signed this week by Trump.
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Nearly two-thirds of Walmart U.S. spending goes toward products made, assembled or grown in the U.S., but the remaining third comes from around the world, with China and Mexico being the largest contributors.
The Arkansas-based company, which economists use as a gauge to understand consumer health, reported revenue of $165.6 billion, which is in line with expectations. Adjusted earnings per share slightly beat Wall Street expectations.
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For the first time, its e-commerce business achieved a full-quarter of profitability in the U.S. and worldwide. E-commerce sales grew 22%. Sales at U.S. stores open for at least a year grew 4.5% due to the strong growth in the health and grocery segments.
However, the company saw weakness in the general merchandise category, which are typically higher margin products. The company specifically reported weaker sales in electronics, home, and sporting goods. However, that was offset by strength in toys, automotive and kids apparel, Walmart said.
The company said that the “lack of clarity that exists in today’s dynamic operating environment makes the very near-term exceedingly difficult to forecast.”
Still, it remains confident that Walmart net sales will grow 3.5% to 4.5% in the second quarter. However, Walmart said that, given that trade talks and related news are constantly shifting, sometimes daily, “the range for operating income of outcomes for the quarter is much wider.”
The company still expects full-year net sales to grow 3% to 4%.
Original article source: Walmart says some price increases are possible in tariff ‘uncertainty,’ e-commerce sales grow
