Walmart Posts Strong Q1 Sales, Responds to Tariffs
Driven by a growing number of e-commerce sales, namely in the grocery and fashion categories, Walmart experienced its best first quarter in nine years. The mega-retailer exceeded Wall Street’s expectations of $1.02 earnings per share and came in at $1.13. Total revenue for the quarter stood at $123.9 billion – ever so slightly below the estimated $124.94, and comp store sales were in-line with expectations at 3.4 percent. The key ingredient behind it all: a 37 percent growth in e-commerce sales.
"We're changing to enable more innovation, speed and productivity, and we're seeing it in our results,” CEO Doug McMillon said in a statement. “We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S. Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank them for a strong start to the year."
In what should be a celebratory time for the retailer though now involves the threat of tariffs. The transition from a 10 percent increase to 25 percent on $200 billion worth of Chinese imports is expected to hit clothing, furniture, and electronics the hardest.
Walmart Chief Financial Officer Brett Biggs addressed the elephant in the room in an interview revealing that customers would indeed face higher prices due to the tariff increase.
“We’re monitoring the tariff discussions and are hopeful that an agreement can be reached,” said Biggs. “Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind. Our merchant teams have been focused on this for months and continue to execute appropriate mitigation strategies.”
In a slew of recent tweets, the president made a few recommendations on ways to avoid tariffs:
....so that they will be more competitive for USA buyers. We are now a much bigger economy than China, and have substantially increased in size since the great 2016 Election. We are the “piggy bank” that everyone wants to raid and take advantage of. NO MORE!
— Donald J. Trump (@realDonaldTrump) May 14, 2019
Though it may not be easy, Biggs said Walmart would make every effort to obtain products from different countries and work with suppliers’ “costs structures to manager higher tariffs.”