Walmart warns it can't hold on price forever with tariff hit coming
Walmart Inc. delivered another quarter of solid sales and earnings growth, but cautioned that tariffs and increasing economic turbulence means even the world's largest retailer expects to begin raising some prices this month.
Sales rose 4.5% at US Walmart stores open at least a year for the quarter ended April 30, while adjusted earnings were 61 cents a share. The results are better than what Wall Street analysts were expecting, suggesting a decision to lower prices to win market share is paying off for the retailer.
Still, President Donald Trump 's expansive, on-off tariffs haven't spared the company. Transaction growth slowed from a year ago and sales were choppy, with grocery and pharmacy holding up while general merchandise slumped. And price increases fueled by the trade ware are soon expected to hit shelves.
'If you've not already seen it, it will happen in May and then it will become more pronounced,' Chief Financial Officer John David Rainey said of price hikes in an interview.
Walmart's shares rose 2.2% in premarket trading. The stock had gained 7.2% this year through Wednesday, topping the S&P 500 Index, which had been little changed.
While the company plans to hold pat on its full-year sales and profit guidance, it opted not to give guidance on income for the ongoing quarter due to the inability to confidently predict 'trade discussions taking place is changing by the week, and in some cases by the day,' the company said in a statement on Thursday. 'The lack of clarity that exists in today's dynamic operating environment makes the very near-term exceedingly difficult to forecast.'
The range of outcomes is 'pretty extreme,' Rainey said, adding that the company is bracing for a bigger hit from the trade war and overall economic malaise in the coming months.
Trump's trade war has upended operations for businesses across all industries. While temporary agreements – including the latest 90-day deal with China – are expected to alleviate short-term pressure on the supply chain, the whiplash has made it tough for companies to respond or plan.
Most consumer-facing companies have reported soft results in recent weeks, citing volatility in demand and economic disruption. Procter & Gamble Co. and Kraft Heinz Co. slashed their annual outlooks, while Southwest Airlines Co. and other airlines have voiced concerns about a looming recession. Just a handful of names — such as Tapestry Inc. — has posted upbeat reports.
Walmart's results now raise the pressure for competitors scheduled to report in the coming weeks, including Home Depot Inc. and Target Corp. The retailer's performance also tends to serve as a barometer of the US economy, so the fact that Walmart performed well but is still warning investors of more tariff pain ahead is an ominous sign.
'It's a challenging environment to operate in retail right now, with prices going up like this. There really hasn't been a historical precedent or prices going up this high, this fast,' Rainey said. 'The magnitude of the tariff increases though are so large that retailers can't absorb these by themselves.'
There hasn't been major changes in prices across the industry so far, Rainey said, though tariff-related increases are hitting stores now and Walmart expects them to become more significant as the year progresses. The company said it will monitor such changes and how its competitors respond to them.
Walmart is better-positioned than other retailers to weather the range of challenges. The company's global supply chain allows it to source products from a wide range of regions, while its scale means it can negotiate better deals with suppliers.
Known for low prices, the company typically performs well during times of economic hardships when people gravitate toward deals. Its digital operations are also giving Walmart a leg-up. The retailer is drawing more shoppers with its pickup and delivery services, and bringing in more higher-income shoppers into to buy groceries and things like cold medicine and baby products.
Advertising and newer units are generating higher profit margins than its core store operations, giving it cushion to invest in prices and other parts of the business.
Walmart said its online business posted a quarterly profit for the first time during the latest period.
Speaking during analyst day in April, Walmart executives had said they viewed the tariff environment as an opportunity to gain market share and signaled their intent to keep prices low.
Still, there's been greater week-to-week sales volatility and pointed to factors putting near-term pressure on profits: It wants to be ready to invest in prices as tariffs are enacted, and consumers are buying more groceries that tend to have lower margins. Categories like electronics, home and sporting goods have taken a hit, while rising egg prices were also notable in the quarter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fashion Network
4 hours ago
- Fashion Network
US, Vietnam near trade framework as tariff deadline approaches
The US and Vietnam are closing in on a framework trade agreement, despite ongoing concerns about Chinese goods being rerouted through the Southeast Asian nation to avoid tariffs, according to people familiar with the talks. Negotiations have progressed, with Vietnam seeking to secure tariffs in the range of 20% to 25%, said the people, who asked not to be identified as the discussions are private and nothing is finalized. The agreement would also include a series of US demands, such as stricter enforcement against the transshipment of Chinese products and the removal of non-tariff barriers, the people said. While the final details are unclear, Vietnam had earlier offered to remove all tariffs, as well as to step up trade enforcement and boost purchases of American goods. The final contours of the framework are still being fleshed out in ways needed to secure President Donald Trump 's sign-off, said people familiar with the matter who asked for anonymity to speak candidly about the discussions. More meetings are expected Friday in Washington to address some technical details, they said. Vietnam's foreign affairs ministry did not immediately respond to a request for comment. The White House had no immediate comment. Trump has struggled to reach trade accords by a July 9 deadline for higher tariffs to kick back in. The US has reached one framework plan — with the UK — and a tariff truce with China. Trump on Wednesday said he intended to send letters to trading partners setting unilateral tariff levels — effectively 'take it or leave it' offers — within one to two weeks. Vietnam poses a particular challenge for the Trump administration, as some in Washington consider it a strategic partner in efforts to counter China in Asia, while its exports of consumer goods from clothes to smartphones have become staples for American consumers. But its trade connections with China have inflamed relations with Washington. During Trump's economic battle with Beijing in his first term, manufacturers shifted to Vietnam, building the kind of massive trade surplus that has drawn the ire of Trump and his top advisers. US Trade Representative Jamieson Greer nodded to the progress of talks on Thursday, telling Fox News that he 'just came from a meeting with the Vietnamese that was very helpful, and we'll see if we're able to land something with them.' Greer described a range of options on the table since Trump's April 2 announcement of higher tariffs on dozens of economies, which were put on hold to allow time for negotiations. Nations have presented plans to 'give us more market access, they change some of their harmful policies, and they could qualify for a type of modified tariff depending on how our president feels and how their leaders feel,' he said on Fox. For Trump, Vietnam offered the promise of a quick solution — and it's still a test case for the administration's ability to ink deals with Southeast Asian nations. Vietnam raced to launch trade talks with the US and was singled out by Trump for showing a willingness to negotiate. Still, the talks have been complicated by Trump's zeal to shrink trade deficits with China — and ongoing negotiations with Beijing that could further lower rates. Some US officials want to calibrate tariffs for Vietnam and others in Southeast Asia to ensure they're sufficiently lower than what's imposed on China to encourage production to leave the country, according to people familiar with the matter. Yet if they're too low, the rates may only exacerbate Vietnam's high trade surplus with the US and encourage further shipment of Chinese goods though the country, the people said. Trump said Wednesday the US is maintaining a total of 55% tariffs on Chinese imports after talks in London, but his aides have not said whether that number is a floor. Some of Trump's top trade officials also want to crack down on what they call transshipment — where Chinese goods are minimally finished or repackaged in other countries to avoid tariffs — yet it's unclear whether the US president sees the issue as a deal breaker. Hanoi has increased efforts to enforce country-of-origin standards in part to assuage US concerns. White House trade adviser Peter Navarro sees Vietnam as a particularly notable offender when it comes to transshipment, having called the country 'essentially a colony of communist China' during an April interview with Fox News. Chinese products are brought into Vietnam, he said at the time, and 'they slap a made-in-Vietnam label on it, and send it here to evade the tariffs.' US Commerce Secretary Howard Lutnick echoed that concern earlier this month at a Senate hearing. 'They buy $90 billion from China, then they mark it up and send it to us,' Lutnick said. 'So it's just a pathway of China to us.' Yet Trump has previously signaled a clear interest at cutting deals — even if they're imperfect or not fully fleshed out. And an initial framework agreement leaves the opportunity for further concessions later.
Fashion Network
4 hours ago
- Fashion Network
US, Vietnam near trade framework as tariff deadline approaches
The final contours of the framework are still being fleshed out in ways needed to secure President Donald Trump 's sign-off, said people familiar with the matter who asked for anonymity to speak candidly about the discussions. More meetings are expected Friday in Washington to address some technical details, they said. Vietnam's foreign affairs ministry did not immediately respond to a request for comment. The White House had no immediate comment. Trump has struggled to reach trade accords by a July 9 deadline for higher tariffs to kick back in. The US has reached one framework plan — with the UK — and a tariff truce with China. Trump on Wednesday said he intended to send letters to trading partners setting unilateral tariff levels — effectively 'take it or leave it' offers — within one to two weeks. Vietnam poses a particular challenge for the Trump administration, as some in Washington consider it a strategic partner in efforts to counter China in Asia, while its exports of consumer goods from clothes to smartphones have become staples for American consumers. But its trade connections with China have inflamed relations with Washington. During Trump's economic battle with Beijing in his first term, manufacturers shifted to Vietnam, building the kind of massive trade surplus that has drawn the ire of Trump and his top advisers. US Trade Representative Jamieson Greer nodded to the progress of talks on Thursday, telling Fox News that he 'just came from a meeting with the Vietnamese that was very helpful, and we'll see if we're able to land something with them.' Greer described a range of options on the table since Trump's April 2 announcement of higher tariffs on dozens of economies, which were put on hold to allow time for negotiations. Nations have presented plans to 'give us more market access, they change some of their harmful policies, and they could qualify for a type of modified tariff depending on how our president feels and how their leaders feel,' he said on Fox. For Trump, Vietnam offered the promise of a quick solution — and it's still a test case for the administration's ability to ink deals with Southeast Asian nations. Vietnam raced to launch trade talks with the US and was singled out by Trump for showing a willingness to negotiate. Still, the talks have been complicated by Trump's zeal to shrink trade deficits with China — and ongoing negotiations with Beijing that could further lower rates. Some US officials want to calibrate tariffs for Vietnam and others in Southeast Asia to ensure they're sufficiently lower than what's imposed on China to encourage production to leave the country, according to people familiar with the matter. Yet if they're too low, the rates may only exacerbate Vietnam's high trade surplus with the US and encourage further shipment of Chinese goods though the country, the people said. Trump said Wednesday the US is maintaining a total of 55% tariffs on Chinese imports after talks in London, but his aides have not said whether that number is a floor. Some of Trump's top trade officials also want to crack down on what they call transshipment — where Chinese goods are minimally finished or repackaged in other countries to avoid tariffs — yet it's unclear whether the US president sees the issue as a deal breaker. Hanoi has increased efforts to enforce country-of-origin standards in part to assuage US concerns. White House trade adviser Peter Navarro sees Vietnam as a particularly notable offender when it comes to transshipment, having called the country 'essentially a colony of communist China' during an April interview with Fox News. Chinese products are brought into Vietnam, he said at the time, and 'they slap a made-in-Vietnam label on it, and send it here to evade the tariffs.' US Commerce Secretary Howard Lutnick echoed that concern earlier this month at a Senate hearing. 'They buy $90 billion from China, then they mark it up and send it to us,' Lutnick said. 'So it's just a pathway of China to us.' Yet Trump has previously signaled a clear interest at cutting deals — even if they're imperfect or not fully fleshed out. And an initial framework agreement leaves the opportunity for further concessions later.
Fashion Network
7 hours ago
- Fashion Network
US, Vietnam near trade framework as tariff deadline approaches
The US and Vietnam are closing in on a framework trade agreement, despite ongoing concerns about Chinese goods being rerouted through the Southeast Asian nation to avoid tariffs, according to people familiar with the talks. Negotiations have progressed, with Vietnam seeking to secure tariffs in the range of 20% to 25%, said the people, who asked not to be identified as the discussions are private and nothing is finalized. The agreement would also include a series of US demands, such as stricter enforcement against the transshipment of Chinese products and the removal of non-tariff barriers, the people said. While the final details are unclear, Vietnam had earlier offered to remove all tariffs, as well as to step up trade enforcement and boost purchases of American goods. The final contours of the framework are still being fleshed out in ways needed to secure President Donald Trump 's sign-off, said people familiar with the matter who asked for anonymity to speak candidly about the discussions. More meetings are expected Friday in Washington to address some technical details, they said. Vietnam's foreign affairs ministry did not immediately respond to a request for comment. The White House had no immediate comment. Trump has struggled to reach trade accords by a July 9 deadline for higher tariffs to kick back in. The US has reached one framework plan — with the UK — and a tariff truce with China. Trump on Wednesday said he intended to send letters to trading partners setting unilateral tariff levels — effectively 'take it or leave it' offers — within one to two weeks. Vietnam poses a particular challenge for the Trump administration, as some in Washington consider it a strategic partner in efforts to counter China in Asia, while its exports of consumer goods from clothes to smartphones have become staples for American consumers. But its trade connections with China have inflamed relations with Washington. During Trump's economic battle with Beijing in his first term, manufacturers shifted to Vietnam, building the kind of massive trade surplus that has drawn the ire of Trump and his top advisers. US Trade Representative Jamieson Greer nodded to the progress of talks on Thursday, telling Fox News that he 'just came from a meeting with the Vietnamese that was very helpful, and we'll see if we're able to land something with them.' Greer described a range of options on the table since Trump's April 2 announcement of higher tariffs on dozens of economies, which were put on hold to allow time for negotiations. Nations have presented plans to 'give us more market access, they change some of their harmful policies, and they could qualify for a type of modified tariff depending on how our president feels and how their leaders feel,' he said on Fox. For Trump, Vietnam offered the promise of a quick solution — and it's still a test case for the administration's ability to ink deals with Southeast Asian nations. Vietnam raced to launch trade talks with the US and was singled out by Trump for showing a willingness to negotiate. Still, the talks have been complicated by Trump's zeal to shrink trade deficits with China — and ongoing negotiations with Beijing that could further lower rates. Some US officials want to calibrate tariffs for Vietnam and others in Southeast Asia to ensure they're sufficiently lower than what's imposed on China to encourage production to leave the country, according to people familiar with the matter. Yet if they're too low, the rates may only exacerbate Vietnam's high trade surplus with the US and encourage further shipment of Chinese goods though the country, the people said. Trump said Wednesday the US is maintaining a total of 55% tariffs on Chinese imports after talks in London, but his aides have not said whether that number is a floor. Some of Trump's top trade officials also want to crack down on what they call transshipment — where Chinese goods are minimally finished or repackaged in other countries to avoid tariffs — yet it's unclear whether the US president sees the issue as a deal breaker. Hanoi has increased efforts to enforce country-of-origin standards in part to assuage US concerns. White House trade adviser Peter Navarro sees Vietnam as a particularly notable offender when it comes to transshipment, having called the country 'essentially a colony of communist China' during an April interview with Fox News. Chinese products are brought into Vietnam, he said at the time, and 'they slap a made-in-Vietnam label on it, and send it here to evade the tariffs.' US Commerce Secretary Howard Lutnick echoed that concern earlier this month at a Senate hearing. 'They buy $90 billion from China, then they mark it up and send it to us,' Lutnick said. 'So it's just a pathway of China to us.' Yet Trump has previously signaled a clear interest at cutting deals — even if they're imperfect or not fully fleshed out. And an initial framework agreement leaves the opportunity for further concessions later.
