Walmart dips as investors brace for price hikes, even as it vows to stay the low-cost leader
The retailer says it’ll keep an eye on how much sticker stock shoppers can handle.
Walmart shares slipped as much as 3% Thursday after an early morning pop, as investors digested the company’s solid Q1 earnings beat and a warning that price hikes are on the way.
Walmart CFO John David Rainey told CNBC that shoppers will start to see prices rise by late May and for sure in June. On the earnings call, he added that the retailer is also trimming some orders as it watches how sensitive customers are to higher prices.
It’s a turbulent time to test shoppers’ budgets as consumers start to pull back. Before the 90-day US-China tariff truce was announced, Walmart was already pressing Chinese suppliers to cut prices by as much as 10% per round of tariffs. That move sparked tension with China’s officials, especially given Walmart’s deep exposure: an estimated 60% of its shipments came from their country in 2023.
Still, analysts say Walmart is well positioned to keep its pricing power.
“While they will need to raise some of their prices, they will be very mindful that their prices still remain below their peers’ prices for the same items,” Sheraz Mian, director of research at Zacks Investment Research, said. He added that Walmart’s scale gives it an unmatched ability to secure the lowest possible cost, and now that its e-commerce business is profitable, it has more flexibility to absorb those cost increases in-house.
Meanwhile, retailers including Walmart and rival Costco have been rushing to lock in China-made inventory ahead of peak summer demand. Last month, CEO Doug McMillon reportedly warned President Trump that the latest round of tariffs had started to strain Walmart’s supply chain and would amplify if left unchecked. Despite the dip, Walmart shares are still up about 5% year to date.
