A scolding from President Trump comes with a side of stock price pressure for Walmart (WMT).
Shares of the retail giant fell around 2% in premarket trading on Monday following Trump’s weekend social media post, which urged the company not to increase its prices because of tariffs on Chinese imports.
“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump said in a post on Truth Social. “Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!”
Walmart’s stock has been one of the market’s top performers of the past year amid strong sales and profits, rising 54% compared with a 6% advance for the Dow Jones Industrial Average (^DJI).
“We have always worked to keep our prices as low as possible, and we won’t stop,” a Walmart spokesperson told Yahoo Finance. “We’ll keep prices as low as we can for as long as we can, given the reality of small retail margins.”
Walmart CEO Doug McMillon was among the CEOs who met with Trump in late April to discuss tariff implications. A person familiar with the discussions told Yahoo Finance that Walmart made a case to remove tariffs on China altogether, as even lower tariffs would have major implications on prices for general merchandise items such as furniture and toys.
Read more: What Trump’s tariffs mean for the economy and your wallet
The Trump administration and China agreed to dial back tariffs for 90 days last week. The US tariff rate on China currently sits at 30%, down from 145% at the height of the trade tussle between the economic superpowers.
“Low prices is what we stand for, and we’re going to keep prices as low as we can as long as we can,” Walmart CFO John David Rainey said on Yahoo Finance’s Catalysts (video above) last week in the wake of the company’s first quarter earnings. “But when you look at the magnitude of some of the cost increases on certain categories of items that are imported, it’s more than what retailers can bear. It’s more than what suppliers can bear.”
“And so we’ll work hard to try to keep prices low. But it’s unavoidable that you’re going to see some prices go up on certain items.”
Rainey said price increases will be noticeable later in May
Rainey added, “Well, if you’ve got a 30% tariff on something, you’re likely going to see double digits [in price increases].”
The most impacted areas for Walmart will include baby strollers, furniture, and toys. Price hikes in these departments could have major impacts on suppliers such as Newell Brands (NWL), reports Yahoo Finance’s Brooke DiPalma.
Earnings day
Walmart’s quarterly earnings came in mixed on Thursday as shoppers spent somewhat cautiously, given the greater economic uncertainty.
First quarter sales rose 2.5% from the prior year to $165.6 billion, falling shy of Wall Street estimates for $166.02 billion.
Adjusted earnings per share increased 1.7% year over year to $0.61, beating estimates of $0.58. US same-store sales also beat expectations with a 4.5% increase, led by health and wellness, and groceries.
But the company did see transaction growth at its Walmart US stores weaken in the quarter, compared with trends last year.
And while Walmart reiterated its full-year earnings per share outlook of $2.50 to $2.61, it was mostly below analyst estimates of $2.61. This is despite the retailer beating earnings estimates by $0.03 for the first quarter.
Walmart caveated its guidance by saying that it would be challenging to grow earnings, should US tariff rates on Chinese goods return to 145% (and other “Liberation Day” levels). It also left open the potential to take a more cautious view on the holiday season, based on how back-to-school shopping unfolds.
“We continue to believe WMT is among the best positioned in our coverage to mitigate the impact of tariffs,” argued RBC Capital Markets analyst Steven Shemesh.
Shemesh maintained an Outperform rating on Walmart’s stock. About 91% of the analysts that cover Walmart rate the stock a buy or strong buy, according to Yahoo Finance data.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram and on LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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