CFO: Walmart raising prices because of tariffs

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

Biggs, however, promised Walmart will "continue to do everything we can to keep prices low".

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

Last Friday, the White House increased tariffs on $200 billion worth of Chinese goods from 10% to 25%. "However, increased tariffs will lead to increased prices for our customers", he said.

While Walmart is reluctant to raise prices, such a move is "great for retailers", according to Edward Jones analyst Brian Yarbrough.

Walmart has less exposure to China than many other retailers because more than half of its sales come from groceries.

However, the company imports about a quarter of its merchandise from China, according to UBS analyst Michael Lasser.

Moody's analyst Charlie O'Shea said the potential impact on Walmart and its shoppers from tariffs is limited by its food business.

"We're monitoring the tariff discussions and are hopeful that an agreement can be reached", Biggs said in a statement.

Retailers depend heavily on China in their supply chain. But now they are saying they'll have to pass on the cost to consumers just like they did when the tariff went up previous year on fix parts like inner tubes.

"The stock markets have been hit because there is so much uncertainty right now and you are going to see a lot of volatility in the markets I would argue continuing until this is wrapped up", Winder said. The consumer is going to have to pay more for a lot of critical goods'.

Walmart shares, which have gained 7 percent so far this year, and closed up 1.4 per cent at $101.31 on Thursday.

Many analysts anticipate the pace of USA spending will slow in 2019 amid increasing debt, the imposition of tariffs on consumer goods and general uncertainty about the economy. China accounted for about 41 percent of all apparel sold by USA retailers, 72 percent of all footwear, and 84 percent of all travel goods imported into the United States in 2017.

Walmart said it will cost the company less than for two-day shipping since orders will come straight from warehouses closer to the customer and arrive in a single box rather than multiple packages.

Earlier this week, Walmart stepped up its online battle with Amazon.com Inc by offering one-day delivery in some markets without a shipping fee, weeks after Amazon announced a similar plan.

Comparable sales at United States stores - a key retail-sector benchmark closely-watched by Wall Street - jumped 3.4 per cent, marking the company's best performance in nine years, the company said.

The discount titan posted net income of $3.84 billion, or $1.33 a share, in the quarter ended April 26, up from $2.13 billion, or 72 cents a share, in the year-ago period.

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

Total revenue edged up 1% to $123.9 billion, missing estimates of $125.3 billion. Excluding currency, revenue was up 2.5 per cent at US$125.8 billion. The company expects to offer grocery pickup at 3,100 of its stores and delivery at 1,600 of those locations by year-end.

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