Advertisement
  1. Business

Walmart warns that higher tariffs on imports from China will mean higher prices

FILE - In this April 24, 2019, file photo a Walmart associate works at a Walmart Neighborhood Market in Levittown, N.Y. Walmart Inc. reports earnings on Thursday, May 16. (Associated Press)
Published May 16

NEW YORK — The comments came after the nation's largest retailer reported its best sale performance at its established U.S. namesake stores for the fiscal first quarter in nine years.

"We're monitoring the tariff discussions and are hopeful that an agreement can be reached," said Chief Financial Officer Brett Biggs. But he told reporters, "Increased tariffs will lead to increased prices for our customers."

Walmart declined to comment on what type of price hikes shoppers could expect and which products would get the biggest increases. But the specter of higher prices was also echoed by Macy's CEO Jeff Gennette, who told investors Wednesday that if a fourth round of tariffs take effect, that could mean higher retail prices for both store label and national brands. Target, J.C. Penney and other major retailers will be reporting results in the next few days and should shed more light on the issue.

Walmart, Macy's and other general merchandise stores have been left largely unscathed by the first several rounds of tariffs since they focused more on industrial and agricultural products. But that changed last week when the Trump administration slapped 25% tariffs on imports like furniture. The administration wants to extend the 25% tariffs to practically all Chinese imports not already hit with levies including toys, shirts, household goods and sneakers. That's roughly $300 billion worth of products on top of the $250 billion targeted earlier

Walmart and others have benefited from a continued strong economy and low unemployment, but shoppers continue to look for deals. In particular, Walmart's main customers who live paycheck to paycheck would be particularly sensitive to any price increases. Walmart said it's working with its manufacturing partners to mitigate the impact but declined to comment further.

Such looming extra costs come as Walmart is investing more in its business to compete with online leader Amazon in a fight to see who can get packages to customers faster.

Walmart launched free next-day delivery on its most popular items this week in Phoenix and Las Vegas. It plans to roll out next-day delivery to most of the country by year-end, covering 220,000 popular items from diapers to toys, with a minimum order of $35. Walmart has said the costs for next-day delivery are lower versus two-day service because eligible items will come from a single fulfillment center located closest to the customer. This means orders will ship in one box, or in as few as possible, unlike two-day deliveries that come in multiple boxes from multiple locations.

The announcement was made two weeks after Amazon said would be upgrading its free shipping for members from the standard two-day delivery, to one day.

Walmart, based in Bentonville, Arkansas, said that U.S. sales at stores opened at least a year rose 3.4% during the fiscal first quarter.

U.S. e-commerce business rose 37%, helped by strong sales in fashion and home goods. Walmart's online growth was also fueled by its continued expansion of online grocery services, including curbside pickup and home delivery.

Walmart has about 2,450 stores that offer free grocery pickup for customers who shop online. It also has nearly 1,000 stores that offer same-day grocery delivery. The company said it was on track to offer same-day grocery delivery from 1,600 stores, while also offering grocery pickup from 3,100 stores by year-end.

Walmart's Sam's Clubs posted a 0.3% increase in same-store sales, excluding fuel.

Walmart is also testing innovative new ways to cut costs and make workers more efficient. It officially opened a lab in a Neighborhood Store, a smaller grocer concept, in Levittown, New York, that has thousands of cameras that mind the store and help keep track of items that need to be replenished. It's hoping to scale some of the technology to other stores.

The company reported first quarter net income of $3.84 billion, or $1.33. Earnings, adjusted for non-recurring gains, came to $1.13 per share. That beat per-share earnings projections by 11 cents, according to a survey of industry analysts by Zacks Investment Research.

Revenue was $123.93 billion, missing forecasts for $125.33 billion.

Walmart Inc. stuck to its outlook for the year. Shares rose $3.34, or more than 3%, to $103.22 in morning trading.

ALSO IN THIS SECTION

  1. An American Airlines Boeing 737 Max 8 aircraft approaches Miami International Airport for landing in March. Bloomberg
    The 60-year-old veteran airline employee told investigators he was upset that union contract negotiations had stalled.
  2. Lilly Beth Rodriguez, left, Laura Robertson and Linda Lamont work on a Habitat for Humanity house in north Pasco. [Times (2013)]
    The increase is expected to happen in the first half of next year. CEO hopes other nonprofits follow suit.
  3. The number of single-family homes sold in the Tampa Bay area during August rose 2.8 percent when compared with the same month last year, according to a monthly report from Florida Realtors. (Times file photo)
    The midpoint price in the bay area rose to $250,000, which is still lower than the state and national median prices.
  4. The Aldi store located on 1551 34th St N, St. Petersburg, Florida in 2018, features its updated layout. JONES, OCTAVIO   |  Tampa Bay Times
    The store will re-open after renovations on Thursday, Sept. 26
  5. Jessica LaBouve, a penetration tester for cybersecurity company A-LIGN, poses for a portrait in the A-LIGN office on Thursday, Sept. 12, 2019 in Tampa. Companies hire A-LIGN to figure out where their digital security weak spots are, and LaBouve is one of the "benevolent hackers" that finds them. ALLIE GOULDING  |  Times
    Jessica LaBouve of A-LIGN works with companies to make their applications and platforms more secure.
  6. Stephen A. Schwarzman, CEO of the Blackstone Group, speaks at the World Economic Forum in Davos, Switzerland, earlier this year. MARKUS SCHREIBER  |  AP
    The billionaire also talks trade with China in an interview with the Tampa Bay Times.
  7. The economies of Canada and Florida go together like, well, palm fronds and maple leaves, as seen outside the Sweetwater RV Resort in Zephyrhills. (Times file photo) KATE CALDWELL  |  Tampa Bay Times
    To qualify under the proposed Canadian Snowbirds Act, visitors would have to be older than 50 and would have to own or rent a home here.
  8. Tampa investor and owner of the Tampa Bay Lightning Jeff Vinik, right, speaks about his investments in the video game industry at the eSports Summit Wednesday in Tampa as Matt Samost, Vice President of New Ventures for Tampa Bay Sports and Entertainment looks on. LUIS SANTANA   |   TIMES  |  Tampa Bay Times
    A summit at USF brought together major players and explored the possibility of an esports arena.
  9. Neeld-Gordon Garden Center, open at this location since 1925, is closing on Sept. 28. MARTHA ASENCIO-RHINE  |  Times
    The development of Pinellas County and the arrival of the big box stores helped hasten the store’s demise.
  10. 7-Eleven Inc. is opening its first location in a Brandon mall. Pictured is a location in Port Richey in 2018. | [Times (2018) TYLISA JOHNSON | TIMES  |  TyLisa Johnson | Times
    It is the first of eight mall locations opening this year.
Advertisement
Advertisement
Advertisement