Latest news with #McMillon
Yahoo
23-05-2025
- Business
- Yahoo
Walmart stock slides as it signals price hikes due to 'magnitude' of Trump tariffs
Walmart (WMT) posted a mixed quarterly print Thursday morning as it navigates President Trump's tariffs. Its Q1 revenue jumped 2.5% to $165.6 billion, missing Wall Street expectations of $166.02 billion. Adjusted earnings per share grew 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 Walmart stock edged down slightly as it signaled more pain ahead. "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 the release. He added on the earnings call that tariffs have already led to price increases in April and May. Read more: What Trump's tariffs mean for the economy and your wallet McMillon said the "reset of costs" will continue throughout the year, adding for an "imported item, you pay the tariff at the time it comes through customs ... even if the tariff rate comes down later, the cost has been elevated." Robert Ohmes of Bank of America estimates Walmart imports roughly 15% of its US sales from China. Around 60% of the US sales are groceries, which are largely tariff-exempt if they're produced domestically or in Mexico and Canada. McMillon said that "tariffs on countries like Costa Rica, Peru, and Colombia are pressuring imported items like bananas, avocados, coffee, and roses." He added that the company is trying to "keep food prices as low as possible," and hopes it can get help from policy changes. In the quarter, adjusted operating income growth of 2.8% beat its guidance of 0.5% to 2%, though it had walked that range down last month. Prior to Trump's "Liberation Day" announcement, Walmart had guided to annual adjusted operating profit growth of 3.5% to 5.5% on a Feb. 20 earnings release. The company expects net sales for the second quarter to increase 3.5% to 4.5%. It did not provide guidance for adjusted earnings or operating income, as "the dynamic nature of the backdrop" makes it "exceedingly wide and difficult to predict," Rainey said in the release. For the full year, the company reiterated its conservative 2026 fiscal year guidance. It projects net sales to increase between 3% and 4%, in line with a target of 4% annual sales growth it laid out years ago. Telsey Advisory Group's Joe Feldman wrote in a note to clients that the retailer is expected to "weather the pressure better than most." Prior to earnings, Walmart stock was up 7.3% year to date and up more than 4% in the last month as investors have sought out safe havens. That's compared to the S&P 500 (^GSPC) remaining flat year to date and a 30% drop for Target (TGT). Read more about Walmart's stock moves and today's market action. Here's what Walmart reported for its first quarter results, versus Bloomberg consensus estimates: Revenue: $165.61 billion, versus $166.02 billion Adjusted earnings per share: $0.61, versus $0.58 Walmart US same-store sales growth: 4.5%, versus 3.85% Foot traffic growth: 1.6%, versus 3.05% Ticket growth: 2.8%, versus 1.20% E-commerce sales growth: 21%, versus 2.12% Sam's Club US same-store sales growth: 6.7%, versus 4.93% This report could also be a key indicator for other retailers' results. Target, Home Depot (HD), and Lowe's (LOW) are all set to report next week. "Shares are still positioned for outperformance," Oppenheimer analyst Rupesh Parikh told clients in a note prior to earnings. Walmart has the potential for "continued grocery share gains, increasing contribution from alternative revenue streams, ongoing benefits from Walmart's e-commerce investments, and an improved international footprint." Feldman said the company could benefit from a cautious consumer backdrop as low-income consumers seek value items, while higher-income shoppers look for affordable premium products. In Q1, Walmart's e-commerce business achieved its first full quarter of profitability, both in the US and globally. E-commerce sales jumped 22%, compared to expectations of 13.85%. Inventory will be a key metric to watch going forward, as retailers are expected to stockpile goods during the 90-day pause that drops Chinese tariffs from 145% to 30%. In the quarter, its inventory increased 3.8%, compared to estimates of 3.29%. Executives called inventory management even more important as it heads "into a tariff-impacted period where cost pressures will impact item pricing and make it more challenging to anticipate demand by item," Rainey said. Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@ Click here for all of the latest retail stock news and events to better inform your investing strategy Sign in to access your portfolio
Yahoo
20-05-2025
- Business
- Yahoo
Walmart Is Raising Prices. What Will Its Competitors Do?
As Walmart raises prices, it will be easier for its competitors to justify charging more for items, said Neil Saunders, managing director of retail at analytics and consulting firm GlobalData. If Walmart can't mitigate the cost of tariffs, he said, it will be harder for smaller retailers with less clout to find savings or negotiate better deals with suppliers, he said. Walmart plans to start increasing prices this month, CFO John David Rainey has told plans to start increasing prices this month. Don't be surprised to see other retailers follow in its footsteps. Shoppers will start seeing higher prices at the retail giant later this month, CFO John David Rainey told CNBC last week. Smaller competitors, meanwhile, may do the same now that Walmart (WMT) has said it must pass on some of the cost of import taxes, according to Neil Saunders, managing director of retail at analytics and consulting firm GlobalData. 'As a price leader in retail, Walmart's price increase will make it easier for other retailers to follow suit,' Saunders told Investopedia in emailed comments. 'It also helps to justify increases as other firms can say, look if Walmart is doing this then it's reasonable for us as a smaller business to do this too.' Given its size, Saunders said, Walmart may also be better able to negotiate terms with suppliers—or to absorb tariff costs by identifying savings elsewhere in its business. The Arkansas-based business wants to limit price increases and preserve price gaps with competitors, but can't maintain current prices on all merchandise, CEO Doug McMillon said on an earnings conference call last week. "We aren't able to absorb all the pressure, given the reality of narrow retail margins,' McMillon said. Walmart will try to avoid raising prices in the grocery aisles, and be deliberate about changes in other segments, executives said. Goods from China, such as electronics and toys, are most likely to go up in price, McMillon said on the earnings call. 'In some cases, we'll absorb costs within a category or department and not simply pass on a tariff cost attributable to each item individually,' McMillon said. Several companies have indicated they will increase prices in response to tariffs, including the household goods giant Procter & Gamble (PG), the luxury goods company Hermès and the toy manufacturer Hasbro (HAS). Walmart's announcement has made more headlines, perhaps because the retailer's low prices have been shown in studies to limit price increases elsewhere. And competitors aren't the only ones eyeing Walmart prices. President Donald Trump said over the weekend that Walmart should 'EAT THE TARIFFS.' Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time of India
20-05-2025
- Business
- Time of India
I will be watching and so ...: After Amazon founder Jeff Bezos, Walmart CEO Doug McMillon gets 'schooled' by Donald Trump
Donald Trump has publicly criticised Walmart, stating that the retailer should "eat the tariffs" rather than attributing increased prices to his administration's import duties. The US President's comments were a direct response to Walmart CEO Doug McMillon 's recent warning that it would begin raising prices later this month due to high tariffs. Trump's latest directive follows a similar public rebuke he delivered to Amazon founder Jeff Bezos after the e-commerce giant reportedly considered displaying the added cost of tariffs on certain items. Trump's schooling comes after McMillon, in a recent interview, said that the company could not absorb all tariff costs due to narrow retail margins. Despite this, McMillon affirmed the retailer's commitment to ensuring that tariff-related costs on general merchandise, primarily imported from China, would not lead to higher food prices. 'We'll keep prices as low as we can for as long as we can, given the reality of small retail margins,' the company said in a statement to the news agency Reuters. Trump's reply came after this statement. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Pumpkin Seed: The Greatest Enemy of Stubborn Fat Hollywood News Learn More Undo What Donald Trump said about Walmart CEO's reaction to tariffs Responding to McMillon's remarks, Trump took to the social media platform Truth Social to write: 'Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. 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!!!' Earlier, Walmart had also asserted its commitment to keeping prices as low as possible. Amid growing U.S.–China trade tensions and reduced consumer spending, many American companies have cut or withdrawn their full-year forecasts. As a key indicator of consumer health, Walmart warned that Trump‑imposed tariffs are weighing on the retail sector, even as it leverages its cost‑management strengths to keep prices low for the 255 million weekly shoppers who live within 10 miles of a store or order online. Walmart's disclosure follows reports that were later denied by Amazon of its plans to reveal how much tariffs were increasing the cost of the product on the platform. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
The Herald Scotland
19-05-2025
- Business
- The Herald Scotland
Treasury Sec. Scott Bessent: Consumers may bear some cost of tariffs
The back and forth came after McMillon told investors the company will "do our best" to keep prices down, "but even at the reduced levels, the higher tariffs will result in higher prices." "Understand, that came from an earnings call," Bessent said of McMillon's comment. "On an earnings call - because of SEC requirements - they have to give the most draconian case." "So Walmart will be absorbing some of the tariffs. Some may get passed on to consumers," he added. Trump has long insisted that other countries pay the cost of tariffs, despite many economists saying American businesses importing foreign goods pay for tariffs and usually pass that cost on to customers to retain their profit margins. Bessent in the interview added that McMillon told him that the most important thing for Walmart's customers are gasoline prices. Those have dropped since Trump took office, which economists note is due to a range of global factors. "Service prices are down," Bessent added. "So overall, I'd expect inflation to remain in line." Trump's tariffs have upended global trade since early April, when he announced 10% tariffs on imports from all countries and higher nation-specific tariffs on 60 countries. He has since paused those additional tariffs and pursued negotiations with countries to reach a deal on rates. Tariffs against China, the United States' chief economic rival on the world stage, at one point reached a staggering 145% as rates ratcheted up in a trade war. But the two countries agreed on May 12 to slash tariffs for 90 days while they work out a long-term agreement.
Yahoo
17-05-2025
- Business
- Yahoo
Trump tells Walmart to ‘eat the tariffs' as retailer expects prices to increase
President Donald Trump on Saturday said Walmart needs to stop 'trying to blame tariffs' after the retail giant announced its products would become more expensive. Walmart's CEO said the price increases were a result of Trump's tariffs being 'too high,' particularly when it came to Chinese goods. '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 Douglas McMillon said Thursday in an earnings call. Trump responded on Saturday, posting to Truth Social that '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!' Trump's comments echoed Commerce Secretary Howard Lutnick's comments Sunday on CNN's 'State of the Union,' arguing that 'businesses and the countries primarily eat the tariff.' Former Treasury Secretary Larry Summers has called such theories 'ludicrous.' Economists have told CNN that the tariffs will burden lower- and middle-income Americans, who have historically been Walmart's primary customer base. And consumers often go to the retail giant for non-negotiable purchases, such as groceries. The changes will likely take effect by the end of May, and prices will increase 'much more' in June, Walmart's finance chief, John David Rainey, told CNBC. Walmart, which has over 4,600 stores in the United States, gets merchandise from Canada, China, India, Mexico and Vietnam, among other nations. Those countries face at least 10% in tariffs, and imports of steel, aluminum, cars and auto parts face 25% tariffs. 'All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact,' McMillon said. Trump increased tariffs on most Chinese goods to a whopping 145%, but that rate dropped to 30% on Monday as part of a 90-day truce with China. But Trump said the tariffs could become 'substantially higher' if a trade agreement with China is not reached. Other countries are negotiating with the United States amid a 90-day pause on reciprocal tariffs. Baseline tariffs will not go lower than 10% during negotiations, Lutnick told CNN on Sunday. Trump's trade war has sunk consumer sentiment in recent months. The University of Michigan reported that consumer sentiment fell 2.7% between April and May — a near-record low, in part due to Americans fearing a recession. Here's what is expected to get more expensive at Walmart. 'Food inflation is very much on our mind,' McMillon said. Bananas, avocados and coffee are among some of the groceries that McMillon said come from Colombia, Costa Rica and Peru. America also imports beets, cabbage, melons, and pineapples from Costa Rica. Sweet potatoes and citrus are imported from Peru. Walmart did not say how much prices could increase on fruits and vegetables. 'We'll do our best to control what we can control in order to keep food prices as low as possible,' McMillon said, suggesting that 'controlling the amount of fresh food waste' could help. Between February and April, the average price of bananas per pound has increased by about 2 cents at US retailers, according to the Bureau of Labor Statistics. Ryan Monarch, assistant professor of economics at Syracuse University, told CNN that seasonal and holiday shopping purchases can't be delayed for two to three months to wait on the trade war to play out. Walmart is currently focused on back-to-school shopping, according to McMillon. He explained that tariffs are paid as soon as a product enters the country through customs, meaning the higher tariffs are already affecting shipments. 'So I think what we're looking at is upward pressure that began in April and plays through the entire year on things that are imported,' McMillon said. Estimating tariff costs and order quantities could 'get more challenging' further down the line when making 'decisions related to things like Halloween and Christmas,' he said. 'China, in particular, represents a lot of volume in certain categories like electronics and toys,' McMillon said. Roughly 80% of toys sold in the United States are made in China, according to the Toy Association, an industry group. Toy companies, like Hasbro, the owner of Nerf and Play-doh, said some items will be cut from its portfolio, and Barbie creator Mattel has issued warnings about potential price hikes due to tariffs. 'Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally,' Trump said earlier this month, acknowledging the potential impact tariffs will have on toys. There has already been a jump in the price of toys. Product pricing analysis from research firm Telsey Advisory Groups showed that the price of a Barbie doll with a swimsuit sold at Walmart's competitor Target rose 42.9% over a week in mid-April to $14.99. Gaming products should also see big price hikes. Initially priced at $450, Nintendo's Switch 2 could instead cost around $600, according to experts. Even an Apple iPhone 17 could cost more than $1,000 instead of $799, according to Daniel Morgan, senior portfolio manager at investment firm Synovus. Childcare products, such as strollers, clothes, car seats and formula, could also see a price hike. Industry experts estimate that about 90% of children's and baby gear products are manufactured exclusively in China, and that won't change anytime soon. 'Customers need those things. Even if they were to raise prices on those products, customers are still going to buy them,' Syracuse University's Monarch said. 'So you might expect products like that to see prices increasing pretty quickly.' In 2024, China sent more than $438 billion worth of goods into American homes. Nearly 19% of that total was machinery and mechanical appliances, according to data from the US International Trade Commission. Meanwhile, 4% of last year's imports from China were bedding, furniture and lighting. Rainey, Walmart's CFO, said general merchandise sales in the United States declined slightly during the first quarter, 'with softness in electronics, home products and sporting goods.' Because home goods are not considered necessities like groceries and baby gear, consumers are more likely to hold off on buying them. 'Consumers are very worried, and what they're doing is they're delaying their purchases of durable goods — things like cars, things like appliances,' said Monarch. Monarch added that Walmart was among companies to increase imports before tariffs took effect, allowing them to stock up on products that won't perish. This story has been updated with additional information. CNN's Nathaniel Meyersohn, Ramishah Maruf, Samantha Delouya and Elisabeth Buchwald contributed to this report.
