Walmart to Raise Prices Amid Tariff Pressures Despite Strong First Quarter Performance

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

---

Image Source:  REUTERS/Dado Ruvic/Illustration

Walmart executives announced on Thursday that the retail giant will begin raising prices later this month due to the high costs associated with tariffs, even as the company reported U.S. comparable sales that surpassed expectations in the first quarter. Shares of the Bentonville, Arkansas-based retailer rose 2% in pre-market trading, reflecting a more than 60% increase in stock value over the past year.

The announcement comes as Walmart joins other retailers in withholding second-quarter profit guidance, citing uncertainty surrounding tariffs imposed by the Trump administration that have disrupted global trade. Chief Financial Officer John David Rainey indicated in a CNBC interview that U.S. shoppers can expect to see price increases by the end of May and into June.

"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 due to narrow retail margins," said CEO Doug McMillon in a statement.

Analysts suggest that while Walmart may leverage its relationships with suppliers and seek efficiencies to mitigate the impact of tariffs, these strategies have their limits. Brian Jacobsen, chief economist at Annex Wealth Management, noted that while some demand destruction may occur due to price increases, a complete collapse in sales is unlikely.

Telsey Advisory Group analyst Joseph Feldman expressed confidence that Walmart's diverse range of products will allow the company to manage price hikes more effectively than many of its competitors. "My sense is Walmart will manage tariffs better than almost every other retailer, and they will be able to continue to generate solid profit," Feldman stated.

Despite the challenges posed by tariffs, Walmart maintained its annual sales and profit forecast for fiscal 2026, expecting adjusted earnings per share to fall between 2.50and2.60, with annual sales projected to rise between 3% and 4%. Jacobsen found it encouraging that Walmart did not retract its full-year forecasts, suggesting that the company anticipates the effects of fluctuating tariffs will balance out over time.

Consumer sentiment in the U.S. has been declining, with many companies reducing or withdrawing their full-year expectations amid the ongoing trade war. The latest data shows that U.S. consumer sentiment has decreased for four consecutive months, and the country's GDP contracted for the first time in three years during the first quarter, raising concerns about a potential recession.

As a bellwether for U.S. consumer health, Walmart's performance offers insights into how the retail industry is navigating the economic volatility caused by tariffs on various countries, including China. The company reported a 4.5% increase in same-store sales for the first quarter, driven by growth in both transactions and unit volumes. Transactions rose by 1.6%, while the average spending per customer increased by 2.8%, with shoppers purchasing more dairy, pantry products, fresh food, and personal care items.

Walmart's e-commerce sales also saw significant growth, rising 21% in the U.S. and 22% globally. This quarter marked the first time Walmart's e-commerce business achieved profitability, benefiting from higher-margin ventures such as online advertising and its marketplace.

The retailer reported an adjusted profit of 61 cents per share for the quarter, exceeding analysts' expectations of 58 cents per share. Looking ahead, Walmart anticipates second-quarter consolidated net sales growth between 3.5% and 4.5%, slightly above the expected 3.46% growth.

As the company navigates the complexities of the current economic landscape, CFO Rainey emphasized the importance of a long-term perspective, stating, "With a longer view into the full year, we believe we can navigate well and achieve our full-year guidance."