China Trade War: Walmart Raising Prices Because of Tariffs?

China Trade War: Walmart Raising Prices Because of Tariffs?

Walmart has cautioned today that prices for shoppers will go up due to higher tariffs on imports from China as the world's largest retailer reported its best comparable sales growth for the first quarter in nine years.

On a call with reporters, Biggs said the chain was going to continue to do everything it could so that it could to keep prices low. That's who we are.

That seems to be the case, but just how much will the increase in prices at Walmart (NYSE:WMT) affect customers?

"This potential fourth tranche of tariffs was not contemplated when we provided annual [earnings] guidance", said Gennette, who expressed hope that trade talks would continue and both nations would hold off on escalating retaliatory measures. He said the company will seek to ease the pain, in part by trying to obtain products from different countries and working with suppliers' "costs structures to manage higher tariffs".

The comments came after the nation's largest retailer reported its best sale performance at its established US namesake stores for the fiscal first quarter in nine years. Target, J.C. Penney and other major retailers will be reporting results in the next few days and should shed more light on the issue. Analysts said other companies such as sporting goods, auto parts and furniture sellers have an even greater exposure to China.

Last week, the Trump administration hiked tariffs on $200 billion of Chinese-made goods. These goods range from industrial materials to makeup to luggage. The administration wants to extend the 25% tariffs to practically all Chinese imports not already hit with levies including toys, shirts, household goods and sneakers.

USA retailers are heavily dependent on China for much of the goods they sell domestically.

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Some analysts feel the escalating trade war between the United States and China will be resolved, but say it's not clear when.

"It is hard to do the math to find a path that gets you to a place where you don't have a customer impact", Macy's Chief Executive Officer Jeff Gennette said on an earnings call Wednesday, describing the impact of the U.S.

Sales at Walmart's United States stores open at least a year rose 3.4 per cent, excluding fuel, in the quarter ended April 30.

Comparable sales at USA 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.

Biggs expressed hope "that an agreement can be reached" between US and China trade negotiators, according to a statement on Thursday released by Walmart.

Walmart's online sales growth clocked in at 37% last quarter, a tick down from the 40% rate online sales grew past year. Walmart has ramped up its online grocery business and acquired trendy fashion brands such as Bonobos and Eloquii. That can be attributed to higher labor costs, price reductions and online sales that typically deliver lower margins than in-store sales.

"We're changing to enable more innovation, speed and productivity, and we're seeing it in our results", said CEO Doug McMillon.

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