Published: Sat, May 18, 2019
Markets | By Erika Turner

Walmart reports jump in profit, warns on tariffs

Walmart reports jump in profit, warns on tariffs

"It's who we are", chief financial officer Brett Biggs said on a conference call with reporters. The fuel behind these higher prices is the ongoing trade war between the USA and China.

Arkansas-based Walmart's cation on tariffs comes after Macy's delivered a similar warning on Wednesday. "Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind".

Consumers will pay for the trade war with China, Walmart said Thursday. Macy's CEO Jeff Gennette has already pulled the trigger.

Walmart reported a jump in first-quarter earnings on Thursday on increased United States store sales and eCommerce growth, but warned that higher USA tariffs could hit its business. "But increased tariffs will increase prices for customers".

Walmart U.S. CEO Greg Foran said its merchants will use "appropriate mitigation strategies" for the tariff threat and will manage costs "on an item by item basis". "There are some places where as we get tariffs, we will take prices up". Transportation costs are up, labour costs are up. But the latest round being discussed is "the big one" and if it goes into effect, will "affect a lot of the apparel and accessory categories that are coming in", Gennette said. That could make a number of goods, including toys, clothes and sneakers, more expensive for American consumers.

Walmart shares, which have gained 7% so far this year, rose 2.4% to $102.30 in pre-market trade.

Walmart CFO Biggs said the retailer has not seen signs of a slowdown in consumer spending.

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

Mike Pompeo warns Russian Federation not to meddle in 2020 U.S. election
His inquiry had cast a pall over U.S. "It's about trying to find solutions, compromises, places where there are overlapping interests".

Earnings for the first quarter came in at $3.8 billion, an increase of 80 per cent from the year-ago period when results were dented by a one-time earnings hit following U.S. tax reform.

The announcement was made two weeks after Amazon said it would upgrade its free shipping for members from the standard two-day delivery, to one day. Analysts estimated growth of 3.1%, according to IBES data from Refinitiv. It marked 19 straight quarters of same-store sales gains. Walmart's adjusted EPS of $1.13 beat analysts' estimate of $1.02. Revenue was up 2.5%, driven by a growing grocery sales business, the Associated Press reported.

In the U.S., the largest piece of Walmart's business, operating income grew 5.5 per cent as some transportation costs eased.

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.

Total revenue was up 1 per cent at US$123.9 billion but lower than analysts' estimates of US$125.03 billion, dragged down by the currency impact and lower worldwide sales.

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

On Tuesday, Walmart said it was considering a stock market listing for its British supermarket arm Asda, whose attempt to combine with rival J Sainsbury was blocked by British regulators last month.

Like this: