A rare warning from Walmart during a US trade war: Higher prices are inevitable

FILE - Shown is a Walmart location in Philadelphia Wednesday Nov AP Photo Matt Rourke File AP Matt Rourke FILE - Shown is a Walmart location in Philadelphia Wednesday Nov AP Photo Matt Rourke File AP Matt Rourke NEW YORK AP Walmart which became the nation s largest retailer by making low prices a priority has identified itself in a place it s rarely been Warning customers that prices will rise for goods ranging from bananas to car seats Executives at the billion company narrated industry analysts Thursday that they re doing everything in their power to absorb the higher costs from tariffs ordered by President Donald Trump Given the magnitude of the duties however the highest since the s higher prices are unavoidable and they will hurt Walmart customers already buffeted by inflation over the past three years Trump s threatened import taxes on Chinese goods were reduced to in a deal stated Monday with specific of the higher tariffs on pause for days Those higher prices began to appear on Walmart shelves in late April and accelerated this month Walmart executives commented Thursday However a larger sting will start to be felt in June and July when the back-to-school shopping season goes into high gear We re wired to keep prices low but there s a limit to what we can bear or any retailer for that matter Chief Financial Officer John David Rainey reported The Associated Press on Thursday after the company revealed strong first-quarter sales Rainey emphasized that prices are rising not just for discretionary items such as patio furniture and trendy fashions but for basic necessities as well The price of bananas imported from Costa Rica rose from cents per pound to cents He thinks car seats made in China that at the moment sell for at Walmart will likely cost customers another Baby strollers are also sourced from China Rainey explained Higher prices arrive as a large number of Americans pull back on spending as they grow increasingly uneasy about the financial sector A slew of companies including toy manufacturer Mattel toolmaker Stanley Black Decker and consumer products giant Procter Gamble have communicated higher prices or plans to raise prices But Walmart s moves are even more critical given its outsized power in the retailing landscape Walmart says that of American households rely on the retailer for a range of products and more than million customers shop on its website or in its stores every week Analysts will dissect the earnings reports from other retailers including Target and Home Depot set to be disclosed next week Leadership figures Thursday revealed slowing sales increase for retailers Walmart says that its consumers have become cautious and selective Tariffs on China and other countries are threatening the low-price model at the core of Walmart s success The full impact of tariff costs had been delayed as companies tried to beat the clock by bringing in foreign goods before Trump s tariffs took effect Retailers and importers had also largely halted shipments of shoes clothes toys and other items due to new tariffs but numerous are resuming imports from China in the narrow window that opened during the temporary truce this week hoping to avoid sparse shelves this fall Yet retailers already operating on thin margins say they have no choice but to raise prices to offset higher costs from tariffs And they are also bracing for higher shipping costs fueled by a surge of companies scrambling to get their goods on ships to the U S Rainey narrated The Associated Press that the retailer did not pause shipments from China as a effect of the tariffs like others because it didn t want to hurt its suppliers and desired to keep merchandise flowing It has built in hedges against specific tariff threats Two-thirds of Walmart s merchandise is sourced in the U S with groceries now accounting for roughly of Walmart s U S business Still Walmart isn t immune CEO Doug McMillon explained analysts Thursday that Walmart imports general merchandise from dozens of countries But China in particular represents a big chunk of volume in certain categories like electronics and toys Tariffs on countries like Costa Rica Peru and Colombia are raising costs on groceries like avocados coffee and roses in addition to bananas company executives noted In selected cases Walmart is absorbing costs on general merchandise within departments or a category and not solely passing on a tariff cost attributable to each item individually executives disclosed Walmart is also asking suppliers to swap input materials for components if viable for example using fiberglass instead of aluminum which Trump hit with tariffs in early March We re very dependent upon imports for these types of products Rainey recounted The Associated Press He revealed there are selected goods for which Walmart merely can t shift production or produce easily in the United States McMillon who was among a select group of CEOs of major retailers who met with Trump at the White House late last month to discuss tariffs notified analysts Thursday that he s hoping tariffs would be further reduced Walmart earned billion or cents per share in the quarter ended April down from billion or cents per share in the same period last year Adjusted earnings per share were cents exceeding the cent projections from industry analysts according to FactSet Revenue rose to billion just short of analyst estimates Walmart s U S comparable sales those from established physical stores and online channels rose in the second quarter though that s slowed from a bump in the previous quarter and a increase in the third quarter of Business was fueled by soundness and wellness items as well as groceries Sales were weaker in home and sporting good which was offset by robust sales of toys automotive goods and kid s clothing the company reported Global e-commerce sales rose Walmart disclosed it expects sales development of to in the second quarter Like a large number of other U S companies however it did not issue a profit outlook for the quarter because of the chaotic context with stated U S tariff policies changing constantly The company maintained its full-year guidance issued in February Source