Walmart warns of rising prices

Cashiers ring up shoppers at a Walmart Inc. store in Burbank California U.S.
Credit
Patrick T. Fallon  Bloomberg

Cashiers ring up shoppers at a Walmart Inc. store in Burbank California U.S. Credit Patrick T. Fallon Bloomberg

Continued growth in comparable sales in Walmart's United States segment, a lower adjusted effective tax rate, and a decrease in the outstanding share count supported Walmart's first-quarter EPS beat.

He said the company will try to ease the pain, in part by working with suppliers' "costs structures to manage higher tariffs".

Retail proponents have long warned an escalation of the trade war with China could result in higher prices.

Earlier this month, Trump increased tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent.

Around half of Walmart's sales are groceries, which are not expected to see price impacts due to the fact that most are domestically sourced.

Consumers will pay for the trade war with China, Walmart said Thursday.

It's not a Walmart-specific issue: Macy's Inc. said Wednesday that the latest tariffs, if implemented, would likely be reflected in its prices. "A sudden tariff increase with less than a week's notice would severely disrupt US businesses, especially small companies that have limited resources to mitigate the impact". "We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S. Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank them for a strong start to the year". "A lot of that's going to have to be passed on". That could make a number of goods, including toys, clothes and sneakers, more expensive for American consumers. Shares rose $1.42 to close at $101.30. China accounted for about 41 percent of all apparel sold by US retailers, 72 percent of all footwear, and 84 percent of all travel goods imported into the United States in 2017.

Investors and analysts expect USA spending to slow this year against a backdrop of rising debt, tariffs and economic uncertainty.

With competition intensifying with retail giant Amazon (AMZN), Walmart announced this week that it will roll out next day delivery without a membership fee for orders of $35 and more.

For the first quarter, Walmart delivered adjusted earnings per share of $1.13, surpassing Wall Street analysts' expectations of $1.02. It was the chain's best first-quarter comp performance in nine years and its fourth consecutive comp gain over 3%.

Operating income fell 4.1 per cent to $4.9 billion, in part because of Walmart's purchase of Indian e-commerce startup Flipkart previous year.

Tariffs pose an obstacle for Walmart, one of the strongest retailers in the United States.

Walmart said its e-commerce sales in the USA grew 37% during the quarter, driven by strong growth in online grocery and its home and fashion categories on Walmart.com.

Revenue was $123.93 billion, missing forecasts for $125.33 billion.

Total revenue was up 1% at $123.9 billion but lower than analysts' estimates of $125.03 billion dragged down by currency impact and lower global sales. Walmart's online growth was also fueled by its continued expansion of online grocery services, including curbside pickup and home delivery.