Walmart will have to start raising prices later this month due to the high cost of tariffs, executives said on Thursday.
US shoppers will start to see prices rise at the end of May and certainly in June, said John David Rainey, Walmart’s chief financial officer, in a CNBC interview.
“We will do our best to keep our prices as low as possible but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” CEO Doug McMillon said.
Walmart became the latest to avoid giving second-quarter profit guidance on Thursday due to the uncertainty around Donald Trump’s tariffs that have roiled world trade.
The retailer, however, kept its annual sales and profit forecast intact for fiscal 2026. It continues to expect annual sales to rise between 3% and 4%.
Walmart is a bellwether of US consumer health. Its results offer clues on how the industry is navigating the economic volatility wrought by the on-and-off tariffs on several countries, including China.
This week, the US and China reached a trade deal for 90 days that resulted in the countries slashing the tariffs imposed on each other, which was widely cheered by investors and businesses.
The latest inflation data, released this week, showed that price increases remained stable in April. But economists warn the full impact of the tariffs on prices have yet to be felt. Many US companies in the wake of the trade war have either slashed or pulled their full-year expectations, a more cautious approach as consumers stretch their budgets to buy everything from groceries to essentials at cheaper prices.
US consumer sentiment had ebbed for a fourth straight month in April, signaling watchful purchasing while the country’s GDP contracted for the first time in three years during the first quarter, fanning worries of a recession.
On Thursday morning Jerome Powell, the US Federal Reserve chair, warned that long-term interest rates are likely to remain elevated because of Trump administration’s shifting policy goals.
“We may be entering a period of more frequent, and potentially more persistent, supply shocks – a difficult challenge for the economy and for central banks,” he said at a policy conference.
Walmart is known for its everyday low-price strategy for regular-use essentials and groceries, which has given the retailer an edge over competitors but at thin margins. It expects second-quarter consolidated net sales to rise between 3.5% and 4.5%, compared with expectations of 3.46% growth.
As the range of near-term outcomes widens and becomes hard to predict, the company is withholding second-quarter operating income growth and earnings per share forecasts, CFO Rainey said in a statement.
“With a longer view into the full year, we believe we can navigate well and achieve our full year guidance,” he added.
