Walmart posted a mixed earnings report for its first quarter, with revenue rising 2.5% year over year to $165.6 billion, slightly below Wall Street expectations of $166.02 billion. However, the company beat adjusted earnings forecasts, reporting $0.61 per share versus the estimated $0.58. U.S. same-store sales rose 4.5%, outperforming expectations, largely driven by strength in groceries and health and wellness. Despite this, Walmart’s stock slipped slightly, reflecting market concerns about future performance as tariff challenges persist.
Tariff Costs Drive Walmart Price Hikes Despite CEO’s Pledge to Keep Prices Low
CEO Doug McMillon emphasized that while Walmart is committed to maintaining low prices, the impact of U.S. tariffs—particularly those tied to imports from China and other countries—has already caused price increases in April and May. McMillon acknowledged that with narrow retail margins, Walmart cannot fully absorb the tariff burden. He also pointed out that even if tariff rates drop later, the upfront customs costs remain elevated, affecting pricing strategies throughout the year.
Walmart Beats Earnings Forecasts but Warns of Tariff Impact and Economic UncertaintyWalmart’s grocery segment, which makes up about 60% of U.S. sales, has largely avoided tariff pressure due to domestic and North American sourcing. However, imported items like bananas, avocados, coffee, and roses from Latin America are being affected by tariffs on countries such as Costa Rica, Peru, and Colombia. The company is working to mitigate the impact on food prices and hopes for supportive policy changes that could ease cost pressures on essential goods.
E-Commerce Strength and Conservative Outlook Amid Ongoing Economic and Tariff-Driven Uncertainty
While Walmart reported a better-than-expected 2.8% growth in adjusted operating income, it scaled back guidance due to economic volatility. The company now expects Q2 net sales to grow by 3.5% to 4.5%, but it withheld earnings and income forecasts, citing an unpredictable business environment. Long-term, Walmart maintained its conservative fiscal 2026 forecast, projecting annual net sales growth between 3% and 4%, aligning with its historical targets.
A highlight of Walmart’s Q1 report was the strong performance of its e-commerce division, which reached profitability for the first full quarter both in the U.S. and internationally. Online sales jumped 22%, significantly beating projections. Analysts believe Walmart is well-positioned to outperform its competitors thanks to its value-driven offerings, expanding digital operations, and solid presence in the grocery sector.
The company is expected to benefit from evolving consumer habits, especially as more shoppers prioritize affordability amid economic uncertainty. Managing inventory effectively will be essential in the coming months, particularly as businesses navigate the ongoing effects of tariff-related cost pressures.
