Walmart’s first quarter profit took a hit, and they’re blaming President Trump’s tariffs for the need to raise prices. The retail giant reported strong sales for the quarter and projected further growth in the next quarter. However, like many other companies, they chose not to give a profit forecast for the upcoming quarter due to the unpredictable nature of the U.S. tariff policies. The company is sticking with the full-year guidance they provided in February, trying to navigate the uncertain waters of the current economic climate.
In the first quarter, Walmart earned $4.45 billion, or 56 cents per share, which is a decrease from the $5.10 billion, or 63 cents per share, they made in the same period last year. Adjusted earnings per share surpassed industry analyst expectations at 61 cents, above the projected 58 cents. Revenue experienced a 2.5% increase, reaching $165.61 billion, slightly falling short of analyst estimates. Walmart saw a 4.5% rise in U.S. comparable sales in the second quarter, a slight decrease from the previous quarter’s 4.6% increase and the third quarter of 2024’s 5.3% growth.
The company’s success was driven by health and wellness products, as well as groceries, while sales of home and sporting goods lagged behind. On the bright side, toys, automotive goods, and children’s clothing sales were robust. Global e-commerce sales saw a significant increase of 22%, up from 16% in the previous quarter. The looming concern for all retailers is future sales, with many Americans cutting back on spending due to economic uncertainty and persistent inflation. President Trump’s tariffs on China and other countries are threatening Walmart’s low-price business model, forcing them to consider price hikes to offset the tariff costs. Despite Walmart’s efforts to source two-thirds of its merchandise domestically, they still anticipate the need to raise prices to account for the impact of tariffs on their business. CEO Doug McMillon acknowledged the challenge, stating, “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.”
Not really sure why this matters, but Amazon also announced higher first-quarter profit and sales that exceeded analysts’ expectations earlier this month. The online retail giant had already imported foreign goods before the tariffs were implemented, giving them an edge in pricing. Amazon’s president and CEO, Andy Jassy, noted that many of their third-party sellers followed suit. As a result, a significant number of third-party sellers have yet to adjust their pricing in response to the tariffs. This move by Amazon and its sellers has implications for the broader retail landscape, as companies navigate the impact of tariffs on their pricing strategies and overall business performance.
