Walmart to raise prices amid tariff pressures despite strong Q1 sales performance

Walmart reported a dip in first-quarter revenue on Thursday and stated it should raise prices due to mounting tariff-related prices stemming from insurance policies applied by President Donald Trump.While the retail big posted strong sales, it acknowledged rising challenges that might weigh on future performance.The firm earned $4.45 billion, or 56 cents per share, for the quarter ended April 30, in contrast to $5.10 billion, or 63 cents per share, in the identical quarter a yr earlier. Adjusted earnings per share got here in at 61 cents, surpassing analyst expectations of 58 cents, in accordance to FactSet as reported by information company AP.Revenue elevated 2.5% year-over-year to $165.61 billion, barely beneath Wall Street projections. Walmart’s US comparable sales—which embody bodily shops and on-line platforms—rose 4.5%, down barely from the 4.6% development within the earlier quarter and the 5.3% soar seen within the third quarter of 2024.Despite the sales positive factors, Walmart warned that tariff prices are forcing the corporate to rethink its pricing technique.“We will do our best to keep our prices as low as possible,” Walmart CEO Doug McMillon instructed business analysts. “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.”McMillon famous that whereas value will increase will seem progressively, they’d already began in April and picked up tempo in May. The firm is especially centered on managing prices for back-to-school merchandise.The Trump administration’s commerce coverage has been a big issue. Tariffs on Chinese items, initially threatened at 145%, had been decreased to 30% in a deal introduced earlier this week. Some of these increased tariffs had been additionally suspended for 90 days. As a consequence, importers who had paused shipments of products resembling sneakers, toys, and clothes at the moment are dashing to restock throughout the non permanent reprieve.Still, increased transport prices and continued uncertainty are prompting many retailers—together with Walmart—to raise prices to offset tariff bills.Although Walmart has built-in hedging methods, it isn’t totally insulated. About two-thirds of its merchandise is US-sourced, primarily groceries, which account for round 60% of its home enterprise. Nonetheless, common merchandise classes stay susceptible due to international sourcing.McMillon stated that whereas Walmart imports from many international locations, China stays a big provider, significantly for classes like electronics and toys.Tariffs on imports from international locations resembling Costa Rica, Peru, and Colombia are additionally affecting prices of grocery objects like bananas, avocados, espresso, and roses. According to McMillon, Walmart is absorbing a few of these elevated prices, particularly inside its common merchandise departments, and is working with suppliers to swap enter supplies—resembling changing aluminum (which is beneath tariff) with fiberglass in product parts.“We have opened this year with a bang,” McMillon added, praising the resilience of Walmart’s suppliers and operations despite the risky commerce setting.Sales within the first quarter had been fueled by demand in groceries and well being and wellness objects, although the corporate famous weaker sales in dwelling and sporting items. That softness was counterbalanced by stronger performance in toys, automotive merchandise, and youngsters’s attire. Global e-commerce sales climbed 22%, accelerating from 16% development within the earlier quarter.Shares of Walmart dropped 4% on the opening bell Thursday.As one of many first main retailers to launch quarterly outcomes, Walmart’s performance provides early perception into client behaviour amid financial uncertainty and ongoing tariff modifications. The firm stated it expects second-quarter sales development between 3.5% and 4.5% however didn’t present revenue steerage due to the unpredictability of US commerce insurance policies.Other main retailers are additionally navigating the tariff panorama. Amazon, which reported strong Q1 sales and income earlier this month, managed to keep forward of the tariffs by importing items earlier than they took impact. CEO Andy Jassy famous that many third-party sellers on Amazon did the identical.