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Business Times
15-05-2025
- Business
- Business Times
Walmart shoppers to face price hikes as Trump tariffs hit
WALMART, the world's largest retailer, will have to start raising prices later this month due to the high cost of tariffs, executives said on Thursday, in a clear signal that US President Donald Trump's trade war is filtering through to the American economy. As a bellwether of US consumer health, Walmart's explicit statement is also a signpost for how the trade war is affecting companies as Walmart is noted for its ability to manage costs more aggressively than other companies to keep prices low. Shares were flat in afternoon trading, recouping most of its early losses of 4 per cent in morning trading after it also declined to provide a profit forecast for the second quarter, even as the company's US comparable sales surpassed expectations in the first quarter. Net sales rose 2.5 per cent to US$165.6 billion, a hair shy of estimates, while same-store sales were up 4.5 per cent. Many US companies have either slashed or pulled their full-year expectations in the wake of the trade war, as consumers curtail their spending. Walmart's statement, however, will resonate nationwide, as roughly 255 million people shop in its stores and online weekly around the world, and 90 per cent of the US population lives within 16 km of a Walmart. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up US shoppers will start to see prices rise at the end of May and certainly in June, Walmart's chief financial officer John David Rainey said in a CNBC interview. On a post-earnings call with analysts, he said the retailer would also have to cut back on orders as it considers price elasticity. As the largest importer of container goods in the United States, Walmart is heavily exposed to tariffs, and even though the United States and China reached a truce that lowered levies for imports on Chinese goods to 30 per cent, that's still a high cost to bear, executives said. 'We're very pleased and appreciative of the progress that has been made by the administration to bring tariffs down ... but let me emphasise we still think that's too high,' Rainey said on the call, referring to the tariff cuts negotiated over the weekend. 'There are certain items, certain categories of merchandise that we're dependent upon to import from other countries and the prices of those things are likely going to go up, and that's not good for consumers,' he added. Other retailers also said they would be boosting prices. German sandal maker Birkenstock on Thursday said it plans to raise prices globally to fully offset the impact of the US tariff of 10 per cent on European Union-made goods. US consumer sentiment ebbed for a fourth straight month in April, signalling watchful purchasing, while the country's GDP contracted for the first time in three years during the first quarter, fanning worries of a recession. Still major economic indicators in April showed that tariffs had not pushed America off a cliff, a point noted by the White House in response to a question on Walmart's price hikes. 'All recent inflation data - from consumer prices to producer prices - have come in below expectations. Meanwhile, private demand growth and job creation remain healthy,' White House spokesperson Kush Desai said. 'Through tariffs and more balanced trade deals, rapid deregulation, and massive tax cuts, the Administration remains committed to further reducing the cost of living,' Desai added. Narrow margins Walmart's CEO Doug McMillon on Thursday said the retailer would not be able to absorb all the tariff costs because of narrow retail margins, but was committed to ensuring that tariff-related costs on general merchandise - which primarily come from China - do not drive food prices higher. To mitigate the impact, Walmart is working with suppliers to substitute tariff-affected components, such as replacing aluminum with fiberglass, which is not subject to tariffs. Despite these efforts, McMillon noted that adjusting costs is more challenging in cases where Walmart imports food items like bananas, avocados, coffee, and roses from countries such as Costa Rica, Peru, and Colombia. Analysts said Walmart was better positioned than rivals as its scale enables it to lean on its suppliers and squeeze out efficiencies to shield customers from tariffs, but only so much. 'There will likely be some demand destruction from tariffs, a complete wreck is unlikely,' said Brian Jacobsen, chief economist at Annex Wealth Management. The retailer reported quarterly adjusted profit of 61 cents per share. Analysts, on average, were expecting 58 cents per share. The company on Thursday kept its annual sales and profit forecast intact for fiscal 2026. It continues to expect adjusted earnings per share for the fiscal year ending January 2026 in the range of US$2.50 to US$2.60 and annual sales to rise between 3 per cent and 4 per cent. Withheld EPS forecasts Same-store sales in the first quarter grew by 4.5 per cent. Analysts were expecting a 3.9 per cent increase in US same-store sales, according to LSEG. US e-commerce sales rose 21 per cent, while globally they rose 22 per cent. This was the first time Walmart's eCommerce business achieved a full quarter of profitability, benefiting from higher-margin businesses, including online advertising and its marketplace, the company said. The retailer expects second-quarter consolidated net sales between 3.5 per cent and 4.5 per cent, compared to expectations of 3.46 per cent growth. At the same time, however, it withheld second-quarter operating income growth and earnings per share forecasts citing a 'fluid operating environment... (which) makes the very near term exceedingly difficult to forecast at the level and speed at which tariffs could go up.' REUTERS
RTÉ News
15-05-2025
- Business
- RTÉ News
Birkenstock plans price hikes to offset tariffs, sees 'opportunity' in US
German sandal maker Birkenstock plans to raise prices globally to fully offset the impact of the US tariff of 10% on European Union-made goods, chief financial officer Ivica Krolo said today, as the company's sales beat expectations. Birkenstock makes its products at factories in Germany, which is subject to the US's universal 10% tariff on imports. But a higher 20% rate on the European Union still looms, despite a 90-day tariff reprieve granted by President Donald Trump last month. "We will be fully offsetting the effects from current existing tariffs," Krolo told Reuters in an interview. "We're not raising in one region only, we see it as a global exercise." The tariff rate after July 9, when the reprieve ends, is "extremely hard to predict", said Krolo, in the role since February 1, echoing comments from executives around the world trying to navigate the uncertainty. After steep US tariffs on China and Southeast Asia caused shipments of clothes, shoes, and homeware from the country to be cancelled, creating a risk of empty shelves at US stores, Krolo said the fact Birkenstock does not source from Asia was an advantage. "We do see this as an opportunity to take additional shelf space and gain share, and this is also the reason why we are continuing to invest," he said. Krolo called on the European Union to agree a deal with the United States, however, the sooner the better. Birkenstock raised its annual forecasts after sales for its second quarter ended March 31 grew more than expected as more people bought its sandals and more expensive clogs. The company's shares gained about 7% in early trading. Birkenstock said second-quarter capital expenditure of about €21m aimed to expand production capacity to meet growing demand in regions such as the Americas. Revenue in the Americas, its biggest market, was up 23% in the quarter, and Krolo said demand from US retailers and consumers for Birkenstocks remains strong. "In a world where most brands are hoping to be able to raise prices to offset any tariff pressure, Birkenstock has a proven track record of already having permission to do so," said Simeon Siegel, analyst at BMO Capital Markets, referring to consumers' willingness to pay more if needed. Birkenstock now expects 2025 revenue growth to hit the high end of its forecast range of 15% to 17%, and an annual earnings before interest, taxes, depreciation and amortisation (EBITDA) margin between 31.3%-31.8%, up from 30.8%-31.3%. Second-quarter revenue of €574.3m, up 19% from a year ago, was stronger than analysts' estimates of €567.7m according to LSEG. Revenue was helped by double-digit growth in units sold and a mid-single-digit increase in average selling price as Birkenstock sold more clogs. The low-single-digit planned price hikes on Birkenstocks will start to be seen in its fourth quarter from July to September, as some products still need to be shipped into the US from factories in Germany, while most shoes sold now were shipped in before tariffs. Birkenstock is not considering manufacturing in the US, finance chief Krolo said, despite the tariff on imports which Washington has said would help bring manufacturing back to the country.
Business of Fashion
15-05-2025
- Business
- Business of Fashion
Birkenstock Plans Price Hikes to Offset Tariffs, Sees Strong Demand
German sandal maker Birkenstock plans to raise prices globally to fully offset the impact of the US tariff of 10 percent on European Union-made goods, chief financial officer Ivica Krolo said on Thursday, as the company's sales beat expectations. Birkenstock makes its products at factories in Germany, which is subject to the United States' universal 10 percent tariff on imports. But a higher 20 percent rate is still looming, despite a 90-day reprieve by President Donald Trump last month. 'We will be fully offsetting the effects from current existing tariffs,' Krolo told Reuters in an interview. 'We're not raising in one region only, we see it as a global exercise.' The tariff rate after July 9, when the reprieve ends, is 'extremely hard to predict', said Krolo, echoing comments from executives around the world trying to navigate the uncertainty. Higher prices on Birkenstocks will start to be seen in its fourth quarter from July to September, as some products still need to be shipped in to the United States from factories in Germany, said investor relations director Megan Kulick. Birkenstock raised its annual forecasts after second-quarter sales grew more than expected and the brand, known for its sandals, said more people were buying its pricier clogs. Shares of the company were up about 5 percent in premarket trading. Birkenstock said second-quarter capital expenditure of about 21 million euros ($23.53 million) aimed to expand production capacity to cater to growing demand in regions such as the Americas. Net revenue in the Americas, its biggest market, was up 23 percent in the quarter ended March 31, compared with 19 percent a year earlier. Birkenstock now expects fiscal 2025 revenue at the high end of its previous forecast range of 15 percent to 17 percent in constant currency terms. It also said its annual earnings before interest, taxes, depreciation and amortisation (EBITDA) margin would be between 31.3 percent and 31.8 percent, up from the 30.8 percent to 31.3 percent previously forecast. Second-quarter revenue of 574.3 million euros was stronger than analysts' estimates of 567.7 million according to LSEG. By Anuja Bharat Mistry: Editors; Krishna Chandra Eluri, Clarence Fernandez Learn more: Retailers Rush to Save US Summer Shopping Season Following a temporary US tariff cut on Chinese imports, US retailers are accelerating efforts to import summer merchandise from China, reversing a previous slowdown in orders.
Yahoo
26-02-2025
- Business
- Yahoo
The EU's Clean Industrial Deal is a Climate Contradiction, Critics Claim
The European Commission proposed mobilizing nearly $110 billion (100 billion euros) for European Union-made clean manufacturing efforts in support of the Clean Industrial Deal (CID). Championed by European Commission president Ursula von der Leyen, the landmark initiative would cut through the reported rep tape holding companies back from investing in green energy. Attempting to tackle the 'fierce and often unfair' global competitiveness, the comprehensive strategy would accelerate decarbonization while securing Europe's industrial edge. More from Sourcing Journal Hugo Boss Boosts Circular Economy with Textile Subsidiary, Eightyards Hyosung, Loop, Pleatsmama Team on Three Cheers for Circularity The CSDDD is Under Attack Again, Including From the US 'Europe is not only a continent of industrial innovation, but also a continent of industrial production. However, the demand for clean products has slowed down, and some investments have moved to other regions,' von der Leyen said. 'We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden. The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.' Notably, the comprehensive strategy explicitly links decarbonization with re-industrialization, framing sustainability as both economically and ecologically wise. 'This pact aims to position Europe as a world leader in clean industries—from boosting our production 'made-in-Europe' to beefing up regulatory and financial support to our most strategic industrial supply chains,' Stéphane Séjourné, executive vice president for prosperity and industrial strategy, said. 'It also secures our unique European model of setting decarbonization not only as an environmental goal, but also as our economic growth strategy.' The other main vein the CID would hit? The EU's strategic independence. The initiative wants to position Europe as a global leader in clean industries, effectively driving internal economic growth and reducing reliance on external suppliers. Granted, this would require substantial investments made into clean technology as well as simplified regulatory frameworks. More strategically used public procurement to stimulate consumer demand for sustainable goods, too. 'Europe needs to be cleaner, more competitive and self-sufficient,' said Wopke Hoekstra, the European commissioner for climate, net zero and clean growth. 'The Clean Industrial Deal is our business plan: a decarbonization strategy that re-industrializes Europe, driving competitiveness and boosting strategic independence. We've got a plan, and we're putting it into action, starting today, to ensure a prosperous European future.' That plan also includes positioning the EU as a circular economy world leader by 2030, as evident by the commission's alleged adoption of a Circular Economy Act (CEA) in 2026. This would accelerate the circular transition, ensuring that 'scarce materials are used and reused efficiently' while reducing Europe's 'global dependencies' and creating high-quality jobs to boot. The aim is to have 24 percent of materials circular by 2030, according to the European Commission. While this act would theoretically do those things—which ultimately boil down to healing the planet and the economy—a few other things need to happen first. Those things include lowering energy costs, boosting demand, securing funding and investment, promoting circularity, acting globally, and ensuring a skilled workforce—ultimately cutting red tape and effectively 'exploiting the scale of the single market,' per the European Commission's CID roadmap. That would require heavier lifts, such as streamlining the permitting processes for clean energy projects and harmonizing carbon accounting methodologies, among others. 'Today, Europe is making a bold business case for decarbonization as a driver of prosperity, growth and resilience. By committing to delivering on the Green Deal climate objectives, we are setting the stage for a sustainable future,' said Teresa Ribera, the European Commission's executive vice president for clean, just and competitive transition. 'Our plan provides the stability and confidence investors need—unlocking capital, expanding clean tech markets, making energy more accessible and ensuring a fair, competitive landscape where businesses can thrive. But it's also about people. This strategy is designed to create jobs, develop skills, and open opportunities for all Europeans.' Part of that, however, includes the loosening of sustainability reporting rules. The argument for doing so hinges on the symbiotic nature of the aforementioned twin decarbonization and re-industrialization perspective. And though the CID aims to maintain the ambitions of the European Green Deal, critics are concerned with 'unacceptable concessions to polluters' under the guise of competitiveness, arguing that striking a balance between environmental ambitions and economic competitiveness is not just a losing game—it's rigged. The European Environmental Bureau (EEB) expressed concerns that the deal includes 'dirty concessions' to polluters and weakens the holistic approach of the Green Deal. The federation of environmental citizens' groups across the EU broke down the pros and the cons (and the rest) in a statement released earlier today. The good? It's a strong tool for industrial decarbonization efforts as it 'reinforces to key drivers for transforming energy-intensive industries: electrification with renewables, and circularity.' The bad? Limited in scope, the CID frames 'productivity growth' as the only priority—while 'treating energy-intensive industries as an exclusive club, deserving all EU political and financial support.' 'A 'clean' deal that ignores pollution is a contradiction,' the EEB continued. 'The chemical industry escapes scrutiny, with no plans to detoxify, monitor or clean up its processes and sites. Europe must also prioritize zero-pollution and toxic-free manufacturing capacity.' The rest? Oscillating between being either too nebulous or too narrow, the EEB called out the deal's overarchingly excessively vague language and lackadaisical goalposts. 'EU policymakers seem increasingly detached from the triple planetary crisis we are facing,' Christian Schaible, head of zero pollution industry at the EEB, said. 'The so-called 'Clean' Industry Deal focuses on decarbonization but overlooks broader pollution and environmental responsibility, failing to show how the EU can lead by example.' Other nongovernmental organizations, globally, had similar reactions. While some see the CID as a simple balancing act, others are considering the vertigo. Zero Waste Europe, for one, argues that the CID falls woefully short of fully leveraging the potential the circular economy has for the much-needed economic transition. 'The Clean Industrial Deal sets a high-level framework that does not go far enough in unlocking the potential of the circular economy,' said Aline Maigret, head of policy at Zero Waste Europe. 'Circularity measures, and the [CID] in particular, should serve as a guiding compass for transforming how we consume and produce, empowering communities, and building resilient economies through job creation in circular sectors. The impact of the CID will hinge on the details that emerge next.' That said, the civil society organization saw significant public funding on the horizon: what Zero Waste Europe is taking as a good indication of transparency and inclusivity's relevance. 'The Clean Industrial Dialogue on circularity is a welcome step—provided civil society has a seat at the table, and such a dialogue is expanded to all CID topics,' Maigret added.
