China Trade War: Walmart Raising Prices Because of Tariffs?

Walmart says it will raise prices because of Trump's new Chinese tariffs

President Donald Trump has started a process to impose new duties on about $300 billion worth of additional Chinese merchandise that cover virtually everything China sells to the United States and encompass household items such as clothing and appliances.

Furniture is already effected by the tariffs, and clothing and accessories are next, should President Trump follow through on his most recent threatened levies on imported Chinese goods, Gennette said.

Walmart is planning to raise prices on items impacted by tariffs on Chinese goods, according to CFO Brett Biggs. Shares rose $1.42 to close at $101.30. China retaliated on Monday, though on a smaller scale. However, price investments, higher digital fulfillment costs, and increased supply chain costs remain a drag on the companies' margins and EPS.

Moody's analyst Charlie O'Shea said the potential impact on Walmart and its shoppers from tariffs is limited by its food business. Its grocery operation, which includes fresh food, contributes roughly 56 percent to overall revenue.

"We're monitoring the tariff discussions and are hopeful that an agreement can be reached", Biggs said in a statement. 'A lot of that's going to have to be passed on.

Biggs said the retailer has not seen signs of a slowdown in consumer spending, but he declined to comment on the health of the consumer in the near term.

The tariffs are expected to affect the apparel, travel and footwear industries the most.

Many analysts anticipate the pace of US spending will slow in 2019 amid increasing debt, the imposition of tariffs on consumer goods and general uncertainty about the economy.

The move came some two weeks after Amazon announced it was upgrading its free shipping for Prime members to one day delivery from the standard two-day.

Comparable sales for Walmart stores in the US climbed 3.4 per cent in the first quarter, its best for the period in nine years.

Tariffs, according to Evercore ISI analyst Greg Melich, are "the next key swing factor", as they could "wipe out" earnings growth across the sector this year. Adjusted per-share earnings came to $1.13, topping analysts' estimates of $1.02. It marked 19 straight quarters of same-store sales gains.

In the United States, the largest piece of Walmart´s business, operating income grew 5.5 per cent as some transportation costs eased.

Operating income fell 4.1 per cent to US$4.9 billion, in part because of Walmart's purchase of Indian e-commerce start-up Flipkart previous year. Excluding currency, revenue was up 2.5 per cent at $125.8 billion. Walmart's online growth was also fueled by its continued expansion of online grocery services, including curbside pickup and home delivery.

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

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.

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