Walmart featured another quarter of solid sales and profit growth, but warned that tariffs and growing economic turmoil mean even the world’s largest retailer expects to increase prices.
Sales increased 4.5% in US Walmart stores open at least one year ago in the quarter ended April 30, while the adjusted profit was 61 cents per action. The results are better than expected by Wall Street analysts, suggesting that the decision to reduce prices to gain market share is fruit to the network.
However, President Donald Trump’s expansive and intermittent fares spared the company. The growth of transactions slowed over the previous year and sales were irregular in the last quarter, with food and pharmacies remaining, while the retail of general goods fell. And price increases driven by the trade war should soon reach the shelves.
“If you haven’t seen it yet, it will happen in May and then become more pronounced,” said chief financial officer John David Rainey in an interview on price increases.
Walmart’s shares fell 4% at 9:54 in New York, the biggest intradia drop in about a month. The shares rose 7.2% this year until Wednesday, surpassing the S&P 500 index, which was poorly changed.
Walmart “demonstrated its resilience” during a volatile quarter, wrote Michael Lasser, an analyst at UBS Securities, in a note to customers. “This is a point of proof that Walmart will be able to successfully navigate in an operating environment that can be challenging.”
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Although the company plans to maintain its outlook for sales and profits for the full year, it has chosen not to give guidance on revenue for the quarter in progress due to the inability to predict changes in commercial policy with confidence. The scenario is “changing every week and, in some cases, every day,” the company said in a statement on Thursday.
The range of results is “quite extreme,” said Rainey, adding that the company is preparing for a greater impact on the trade war and the general economic malaise in the coming months.
On Thursday, the US reported that retail sales in April barely increased, suggesting that consumers reduced spending.
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Trump’s trade war has destabilized business operations in all sectors. Although temporary agreements – including the latest 90 -day agreement with China – are expected to relieve short -term pressure on the supply chain, oscillations have made it difficult for companies to respond or plan.
Most consumer companies have reported weak results in recent weeks, citing demand volatility and economic interruptions. Procter & Gamble Co. and Kraft Heinz Co. reduced their annual perspectives, while Southwest Airlines Co. and other airlines expressed concerns about an imminent recession. Just a handful of names – such as Tapestry Inc. – presented optimistic reports.
Walmart’s results now increase pressure on competitors scheduled to report in the coming weeks, including home depot Inc. and Target Corp. The retailer’s performance also tends to serve as a US economy thermometer, so the fact that Walmart has done well, but still warned investors about more pain with fare in front is an ominous signal.
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“It’s a challenging environment to operate in retail now, with prices rising like this. There was really no historical precedent for prices rising so high, so fast,” said Rainey. “The magnitude of tariff increases, however, is so great that retailers cannot absorb it alone.”
So far, there has been no significant price changes throughout the industry, said Rainey, although tariff -related increases are hitting stores now and Walmart expects them to become more significant as the year advances. The company said it will monitor such changes and how its competitors will respond to them.
Gain market share
Walmart is in a better position than other retailers to face the range of challenges. The company’s global supply chain allows it to get products from various regions, while its scale means it can negotiate better deals with suppliers. The company said last month that it planned to maintain prices to gain market share.
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The company usually does well during periods of economic difficulties when people turn to offers. Its digital operations are also giving Walmart an advantage. The retailer is attracting more buyers with their withdrawal and delivery services, and bringing more high -income consumers to food products and items such as medicines and baby products.
Walmart will seek to keep prices as low as possible, especially in food, said CEO Doug McMillon on a call with analysts. However, tariffs on Costa Rica, Peru, Colombia and other countries should press imported products such as bananas, avocados, coffee and roses.
Maintain some prices
For other tariff items, the company will change production if you can. It will also maintain the prices of some products, said McMillon.
Walmart suppliers are changing materials, such as aluminum change affected by fiberglass tariffs.
However, the company’s executives warned that they will not completely sacrifice profit margins to keep prices low.
“I really want to grow profit faster than sales,” McMillon said, reiterating one of his long -term goals.
Walmart said its online business had a quarterly profit for the first time during the last period as US e -commerce revenue jumped 21%.
The largest online volume is allowing the company to distribute delivery orders among various homes, helping profitability. The growing disposition of consumers to pay more for fast delivery, as well as Walmart’s efforts to build a more efficient infrastructure, are also reducing costs.
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