Walmart announced today it will begin raising prices later this month due to mounting tariff costs, even as the retail behemoth reported first quarter U.S. comparable sales that exceeded analyst expectations. The company’s shares edged up 0.5% in pre-market trading, continuing a remarkable trajectory that has seen the stock climb more than 60% over the past year.
The Bentonville, Arkansas-based retailer became the latest major company to avoid providing second-quarter profit guidance amid uncertainty surrounding Donald Trump’s tariffs that have disrupted global trade patterns. However, in a sign of longer-term confidence, Walmart maintained its full-year forecast despite the immediate pressures.
When consumers will feel the impact
U.S. shoppers can expect to see price increases beginning at the end of May and becoming more noticeable in June, according to Walmart Chief Financial Officer John David Rainey. The timing coincides with the implementation schedule for various tariff measures announced in recent weeks.
The retailer emphasized its commitment to keeping prices as competitive as possible but acknowledged the financial realities of the situation. CEO Doug McMillon noted the company’s narrow profit margins make it impossible to absorb all tariff-related costs without passing some increases to consumers.
4 ways Walmart can mitigate tariff impact
Market analysts identified several factors that may help Walmart navigate the challenging tariff environment more effectively than competitors:
- Supplier leverage allowing the company to negotiate better terms
- Operational efficiencies that can offset some cost increases
- Diverse product mix enabling more flexible pricing strategies
- Scale advantages that smaller retailers cannot match
Brian Jacobsen, chief economist at Annex Wealth Management, offered reassurance about Walmart’s prospects, indicating that while tariffs might cause some demand reduction, a complete disaster remains unlikely.
Telsey Advisory Group analyst Joseph Feldman expressed similar confidence in the retailer’s ability to distribute price increases strategically across its broad merchandise assortment, making them less noticeable to shoppers. He suggested Walmart would manage tariffs better than almost any other retailer while maintaining solid profitability.
Strong first quarter performance amid economic concerns
The company reported same-store sales growth of 4.5% in the first quarter, surpassing the 3.94% average analyst expectation compiled by LSEG. This growth was driven by increases in both transaction count and average ticket size, with transactions rising 1.6% and the average spend increasing 2.8%.
Shoppers showed particular interest in dairy products, pantry staples, fresh food, and personal care items, indicating continued focus on essentials. Overall net sales rose 2.5% to $165.6 billion, narrowly missing analyst estimates.
The positive results come against a backdrop of deteriorating consumer sentiment, which has declined for four consecutive months as of April. Additionally, U.S. GDP contracted for the first time in three years during the first quarter, fueling recession concerns.
E-commerce achieves profitability milestone
A standout element of Walmart’s report was the performance of its digital business. U.S. e-commerce sales surged 21%, while global e-commerce revenues increased 22%. The company announced that its e-commerce operation achieved full-quarter profitability for the first time, benefiting from higher-margin segments including online advertising and marketplace seller fees.
This digital success represents a significant turning point in Walmart’s multi-year strategy to compete more effectively with Amazon and other online retailers. The company has invested heavily in building its digital infrastructure and expanding services like Walmart+ membership and home delivery.
On the earnings front, Walmart reported quarterly adjusted profit of 61 cents per share, exceeding the 58 cents per share average analyst expectation. The company expects second-quarter consolidated net sales growth between 3.5% and 4.5%, compared to market expectations of 3.46% growth.
Outlook balances short-term caution with long-term confidence
While withholding specific second-quarter operating income and earnings per share forecasts due to tariff uncertainty, the company maintained its annual guidance. Walmart continues to project adjusted earnings per share for the fiscal year ending January 2026 in the range of $2.50 to $2.60 and expects annual sales to rise between 3% and 4%.
This approach suggests management believes the tariff-related disruptions will eventually stabilize, allowing for recovery in later quarters. CFO Rainey explained that the range of near-term outcomes has widened and become harder to predict, necessitating the withholding of second-quarter financial guidance. However, with a longer view into the full year, the company believes it can navigate the challenges successfully and achieve its full-year targets.
The decision to maintain annual targets while suspending quarterly guidance reflects Walmart’s confidence in its ability to manage through economic volatility. Jacobsen found this particularly encouraging, noting that the effects of fluctuating tariffs would likely balance out over a longer timeframe.
As the first major U.S. retailer to report earnings this season, Walmart’s results provide important insights into consumer health and retail industry conditions amid significant economic and policy uncertainty. The coming weeks will reveal whether other retailers can demonstrate similar resilience in the face of mounting tariff pressures.
