Walmart Reports Strong Quarter but Warns of Price Increases from Tariffs
Walmart shared solid financial results for the quarter but also sounded a note of caution about rising prices. The retail giant attributed upcoming price hikes largely to tariffs imposed on goods from China and other key trading partners.
CEO Doug McMillon told analysts during a recent call that while Walmart is committed to keeping prices low, the scale of these tariffs makes it tough to absorb all the extra costs.
Though recent moves to ease tensions in the US-China trade conflict were welcomed, the tariffs remain significant—especially on products like electronics and toys.
Chief Financial Officer John David Rainey said customers can expect to see price increases starting in late May, with more noticeable rises through June. In some cases, prices on certain items could jump by double digits due to tariffs reaching up to 30 percent.
However, Walmart plans to be strategic about how much of these costs get passed on. Rainey explained that for some products, the company might absorb the tariffs to keep prices competitive and gain market share. This means while some prices could climb, others may stay flat or even drop.
Analyst Arun Sundaram noted that Walmart’s vast scale and buying power give it flexibility, allowing it to manage prices differently across its wide range of products.
On the financial side, Walmart reported a profit of $4.5 billion, a 12 percent drop compared to last year but still above what analysts predicted. Revenue grew by 2.5 percent to $165.6 billion, boosted by strong grocery sales in US stores.
McMillon highlighted that Walmart’s size helps it find creative solutions to mitigate tariffs. For example, suppliers have switched to materials like fiberglass instead of aluminum to avoid tariff costs.
The company also pointed out tariffs on goods from countries such as Costa Rica, Peru, and Colombia, impacting everyday items like bananas, avocados, coffee, and flowers.
“We’re focused on keeping food prices as affordable as possible,” McMillon said.
Besides China, Walmart imports extensively from Mexico, Vietnam, India, and Canada. Following the president’s broad trade announcements earlier this year, negotiations with these countries are ongoing, adding to the uncertainty.
Because of this unpredictability, Walmart did not provide a specific profit forecast for the next quarter but reaffirmed its full-year outlook.
Neil Saunders from GlobalData praised Walmart’s position, saying its strong presence in groceries cushions it better than many other retailers during tariff-related disruptions. “While things are calmer now, challenges remain ahead. Walmart is one of the strongest players out there,” he said.
Walmart’s shares jumped after the earnings release but later dipped following warnings about price increases. Sundaram from CFRA attributed this drop to investor disappointment over the lack of a clear profit forecast for the next quarter.
“Although we believe Walmart will meet its full-year targets, investors should expect more earnings swings in the near future,” Sundaram added.
