MW Walmart concedes 'magnitude of tariffs' is pushing prices up after strong first quarter

By James Rogers

Walmart CEO Doug McMillon described the company's immediate challenge as navigating the impact of tariffs in the U.S.

Retail giant Walmart Inc.'s fiscal first-quarter results beat on every key metric Thursday, and it maintained its full-year outlook in the face of economic and tariff-related uncertainties. However, the company said that tariffs could pressure its prices.

On the conference call to discuss the results, Walmart $(WMT)$ Chief Executive Doug McMillon described the company's immediate challenge as navigating the impact of tariffs in the U.S. "We will do our best to keep our prices as low as possible," he said. "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."

McMillon said that cost pressures from all the tariff-impacted markets started in late April and accelerated in May. "We want to keep our food and consumables prices as low as we can," he added, noting that food prices in the U.S. have gone up in recent years, and that the company's customers "have been feeling that all along."

Walmart won't let tariff-related cost pressure on some general merchandise items put pressure on food prices, according to McMillon. However, he noted that food tariffs on countries including Costa Rica, Peru and Colombia are pressuring imported items including bananas, avocados, coffee and roses. "We'll do our best to control what we can control in order to keep food prices as low as possible," he said. "An example would be controlling the amount of fresh food waste."

The CEO added that, in some cases, Walmart is holding its retailers where they are with regard to pricing, despite tariff cost pressure, citing the example of Mother's Day flowers at Sam's Club.

Despite the tariff worries, Walmart joins the list of companies in several sectors that are seeing healthy consumer spending. The global trade war also sparked recent concerns about supply chain upheaval and even fears of U.S. empty shelves.

Walmart shares were down 0.8% in premarket trades.

Adjusted earnings per share for the quarter to April 30 rose to 61 cents from 60 cents a year ago, and beat the average analyst EPS estimate compiled by FactSet of 58 cents. That marked the 12th straight quarter of bottom-line beats, according to FactSet data.

Total revenue grew 2.5% to $165.6 billion, above the FactSet revenue consensus of $165.69 billion.

Walmart's U.S. business saw net sales rise 3.2% to $112.2 billion, just below the FactSet consensus estimate of $112.6 billion. Comparable sales for Walmart U.S. stores increased 4.5% to beat expectations of 3.8%.

The number of transactions at Walmart U.S. stores grew 1.6% and the value of the average ticket increased 2.8%. Walmart U.S. sales were led by health & wellness & grocery, while seasonal events were strong, the company said, in a statement.

Walmart's membership-based warehouse business, Sam's Club U.S., saw net sales rise 2.9% to $22.1 billion, below the FactSet consensus estimate of $22.3 billion. Comparable-store sales jumped 6.7%, outpacing the FactSet consensus estimate of 4.5%, as transactions were up 4.8% and average ticket price rose 1.7%.

The company said that Sam's Club sales were led by grocery and health & wellness, and highlighted its fourth consecutive quarter of positive general merchandise sales.

For the full 2026 fiscal year, Walmart said it still expects net sales growth of 3% to 4% and adjusted EPS of $2.50 to $2.60. For the second quarter, the company said it expects net sales to increase 3.5% to 4.5% in constant currency.

The stock has run up 7.2% year-to-date through Wednesday while the Consumer Staples Select Sector SPDR XLP exchange-traded fund has gained 1.1% and the Dow Jones Industrial Average DJIA has fallen 1.1%.

The consumer-discretionary sector as a whole was lifted this week by the preliminary agreement between the U.S. and China to set tariffs on Chinese goods at a 30% rate.

Tomi Kilgore contributed.

-James Rogers

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May 15, 2025 09:07 ET (13:07 GMT)

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