Walmart reported a quarter of its even solid sales on Thursday, but the retail giant known for its low prices warned that President Trump's tariffs could urge the company to start raising prices.
Walmart, the largest retailer in the US, said Thursday that sales in U.S. stores rose more than 3% in the latest quarter to $112.2 billion, continuing through April. The company's e-commerce sales rose by more than 20%, with the fast-growing segment recording its first profitable quarter.
Retailers are still maintaining full-year financial forecasts without changing from previous forecasts in February, with revenues expected to rise 3-4% this year. Many other large companies have recently abolished forecasts and say it is too difficult to make forecasts under the Trump administration's repeated, unaddressed tariff policies.
However, Walmart's sales remain strong and despite its forecasts remain stable, executives said tariffs weigh the company and could lead to higher prices. Walmart Chief Financial Officer John David Rainey said in an interview with CNBC that he was able to see the increase soon at the end of this month.
“We will do our best to keep prices as low as possible, but given the magnitude of the tariffs, even the levels of decline announced this week cannot absorb all the pressure given the narrow reality of retail margins,” Walmart CEO Doug McMillon said in a statement Thursday.
The latest quarter lasted for three months, during which tariffs hit Corporate America, with Wall Street analysts and investors carefully watching Walmart's reports on signs of fallout from Trump's trade war in the retail sector. Trump announced a series of tariffs in dozens of countries in early April. On Monday, the Trump administration temporarily lowered tariffs on many Chinese imports to 30%, down from the 145% rate that had been in place for nearly a month.
Walmart executives have acknowledged uncertainty over the past few months about how tariffs will affect the company's revenues, but have emphasized that the retail giant is a good choice to navigate the turmoil. As shoppers faced stubborn inflation and tariff effects, retailers warned investors on previous revenue calls that growth ahead was slow.
The April 9 Investor Event coincided with the escalation of a massive trade war, highlighting that two-thirds of what Walmart sells are taking place domestically and growing or assembled.
Retail industry observers agreed that Walmart is more isolated from increased tariff-induced costs than many of its competitors. Walmart's large-scale grocery business is sourced in the US, limiting its dependence on imports, according to analysts at Bank of America. However, they warned that Walmart will not be affected by increased costs caused by tariffs.
“The company has strong relationships with vendors, strong relationships with consumers, which will help them,” said David Silverman, retail analyst at Fitch Rating. “With that being said, they are important importers.”
As the retail sector continues to face the economic impact of Trump administration policies, Walmart's relatively favorable position compared to its competitors “probably will become even more obvious as the operating environment could become much more difficult as the year unfolds,” an analyst at UBS said in a research note.
Walmart brings millions of customers each week and rings towards the trends of US consumers. Consumer sentiment is diminished and attenuated by concerns about tariff-related price increases and job market outlook. Consumer companies are beginning to point out pullbacks in spending as a result. Walmart has gained market share in recent years by attracting higher-income shoppers, but its customer base includes a large number of low-income shoppers who are less able to budget for the higher prices that tariffs bring.
“Walmart is not the lowest-cost provider,” Silverman said, adding that the company could be adversely affected by pullbacks among low-income shoppers over time. “There's a low price positioning, but not the worst.”
