Walmart Inc. delivered another quarter of solid sales and earnings growth, but cautioned that tariffs and increasing economic turbulence means even the world’s largest retailer expects to begin raising some prices this month.
Bloomberg
Sales rose 4.5% at US Walmart stores open at least a year for the quarter ended April 30, while adjusted earnings were 61 cents a share. The results are better than what Wall Street analysts were expecting, suggesting a decision to lower prices to win market share is paying off for the retailer.
Still, President Donald Trump’s expansive, on-off tariffs haven’t spared the company. Transaction growth slowed from a year ago and sales were choppy, with grocery and pharmacy holding up while general merchandise slumped. And price increases fueled by the trade ware are soon expected to hit shelves.
“If you’ve not already seen it, it will happen in May and then it will become more pronounced,” Chief Financial Officer John David Rainey said of price hikes in an interview.
Walmart’s shares rose 2.2% in premarket trading. The stock had gained 7.2% this year through Wednesday, topping the S&P 500 Index, which had been little changed.
While the company plans to hold pat on its full-year sales and profit guidance, it opted not to give guidance on income for the ongoing quarter due to the inability to confidently predict “trade discussions taking place is changing by the week, and in some cases by the day,” the company said in a statement on Thursday. “The lack of clarity that exists in today’s dynamic operating environment makes the very near-term exceedingly difficult to forecast.”
The range of outcomes is “pretty extreme,” Rainey said, adding that the company is bracing for a bigger hit from the trade war and overall economic malaise in the coming months.
Trump’s trade war has upended operations for businesses across all industries. While temporary agreements – including the latest 90-day deal with China – are expected to alleviate short-term pressure on the supply chain, the whiplash has made it tough for companies to respond or plan.
Most consumer-facing companies have reported soft results in recent weeks, citing volatility in demand and economic disruption. Procter & Gamble Co. and Kraft Heinz Co. slashed their annual outlooks, while Southwest Airlines Co. and other airlines have voiced concerns about a looming recession. Just a handful of names — such as Tapestry Inc. — has posted upbeat reports.
Walmart’s results now raise the pressure for competitors scheduled to report in the coming weeks, including Home Depot Inc. and Target Corp. The retailer’s performance also tends to serve as a barometer of the US economy, so the fact that Walmart performed well but is still warning investors of more tariff pain ahead is an ominous sign.
“It’s a challenging environment to operate in retail right now, with prices going up like this. There really hasn’t been a historical precedent or prices going up this high, this fast,” Rainey said. “The magnitude of the tariff increases though are so large that retailers can’t absorb these by themselves.”
There hasn’t been major changes in prices across the industry so far, Rainey said, though tariff-related increases are hitting stores now and Walmart expects them to become more significant as the year progresses. The company said it will monitor such changes and how its competitors respond to them.
Walmart is better-positioned than other retailers to weather the range of challenges. The company’s global supply chain allows it to source products from a wide range of regions, while its scale means it can negotiate better deals with suppliers.
Known for low prices, the company typically performs well during times of economic hardships when people gravitate toward deals. Its digital operations are also giving Walmart a leg-up. The retailer is drawing more shoppers with its pickup and delivery services, and bringing in more higher-income shoppers into to buy groceries and things like cold medicine and baby products.
Advertising and newer units are generating higher profit margins than its core store operations, giving it cushion to invest in prices and other parts of the business.
Walmart said its online business posted a quarterly profit for the first time during the latest period.
Speaking during analyst day in April, Walmart executives had said they viewed the tariff environment as an opportunity to gain market share and signaled their intent to keep prices low.
Still, there’s been greater week-to-week sales volatility and pointed to factors putting near-term pressure on profits: It wants to be ready to invest in prices as tariffs are enacted, and consumers are buying more groceries that tend to have lower margins. Categories like electronics, home and sporting goods have taken a hit, while rising egg prices were also notable in the quarter.
A host of celebrities and high-end brands have donating goods to ensure Savile Row’s latest annual ‘Pop-Up Crisis’ store will continue to support the Crisis charity event that has so far raised over £650,000 since 2018.
Image: Crisis charity
Across 8-13 December, the pop-up store at 18-19 Savile Row in London’s Mayfair will sell a curated selection of designer clothing, past stock and samples from luxury brands.
Celebs donating goods include Rosie Huntington-Whiteley, Naomie Harris, David Gandy, Jarvis Cocker, Louis Partridge, Jamie Redknapp and Emma Corrin, among others, for a week-long event and raffle with all proceeds going to help end homelessness across Britain.
Hosted by landlord The Pollen Estate, the temporary shop is also selling designer goods donated by Savile Row tailors including Mr Porter, Wales Bonner, Crockett & Jones and many other luxury brands from Barbour, Tod’s to Manolo Blahnik and Watches of Switzerland Group.
This year, celebrity model and fashion entrepreneur David Gandy will also be curating an exclusive online edit on shopfromcrisis.com, including donations from his own wardrobe as well as items from friends including Redknapp’s brand Sandbanks, Hackett and Aspinal of London.
Gandy said: “Having supported Crisis for a number of years, I’m delighted to have had the opportunity to curate my own online edit this year with the help of some of my close friends. It means a lot to know that donations from my own wardrobe are going towards such an important cause. Whether you’re looking for the perfect Christmas gift or to treat yourself, your purchase can help make a real difference to people facing homelessness this Christmas.”
Liz Choonara, executive director of Commerce and Enterprise at Crisis, added: “Pop-Up Crisis is such an iconic event in the Crisis calendar and one that we look forward to every year. We’re thrilled to be partnering with the team once again for another week celebrating the iconic craftsmanship and style of Savile Row – with all proceeds going towards our crucial work to end homelessness.”
Specialist outdoor clothing producer Dryrobe has won a trademark case against a smaller label. The win for the business, which produces waterproof towel-lined robes used by cold water swimmers, means the offending rival must now stop selling items under the D-Robe brand within a week.
Image: Dryrobe
A judge at the high court in London ruled the company was guilty of passing off its D-Robe changing robes and other goods as Dryrobe products and knew it was infringing its bigger rival’s trademark reports, The Guardian newspaper.
The company said it has rigorously defended its brand against being used generically by publications and makers of similar clothing and is expected to seek compensation from D-Robe’s owners for trademark infringement.
Dryrobe was created by the former financier Gideon Bright as an outdoor changing robe for surfers in 2010 and became the signature brand of the wild swimming craze.
Sales increased from £1.3 million in 2017 to £20.3 million in 2021 and it made profits of £8 million. However, by 2023 sales had fallen back to £18 million as the passion for outdoor sports waned and the brand faced more competition.
Bright told the newspaper the legal win was a “great result” for Dryrobe as there were “quite a lot of copycat products and [the owners] immediately try to refer to them using our brand name”.
He said the company was now expanding overseas and moving into a broader range of products, adding that sales were similar to 2023 as “a lot of competition has come in”.
On Friday, France demanded a series of measures from Shein to demonstrate that the products sold on its website comply with the law, but dropped its initial request for a total three-month suspension of the online platform, which had been based on the sale of child-like sex dolls and prohibited weapons.
Shutterstock
At a hearing before the Paris court, a lawyer representing the state said that Shein must implement controls on its website, including age verification and filtering, to ensure that minors cannot access pornographic content. The state asked the court to impose a suspension of Shein’s marketplace until Shein has provided proof to Arcom, the French communications regulator, that these controls have been implemented.
Shein deactivated its marketplace- where third-party sellers offer their products- in France on November 5, after authorities discovered illegal items for sale, but its site selling Shein-branded clothing remains accessible. The state invoked Article 6.3 of France’s Digital Economy Act, which empowers judges to order measures to prevent or halt harm caused by online content.
“We don’t claim to be here to replace the European Commission,” the state’s lawyer said. “We are not here today to regulate; we are here to prevent harm, in the face of things that are unacceptable.” At the time of writing, the hearing is still ongoing.
In a statement issued last week, the Paris public prosecutor’s office said that a three-month suspension could be deemed “disproportionate” in light of European Court of Human Rights case law if Shein could prove that it had ceased all sales of illegal products. However, the public prosecutor’s office said it “fully supported” the government’s request that Shein provide evidence of the measures taken to stop such sales.
France’s decision comes against a backdrop of heightened scrutiny of Chinese giants such as Shein and Temu under the EU’s Digital Services Act, reflecting concerns about consumer safety, the sale of illegal products, and unfair competition. In the US, Texas Attorney General Ken Paxton said on Monday that he was investigating Shein to determine whether the fast-fashion retailer had violated state law relating to unethical labour practices and the sale of dangerous consumer products.
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Politics8 years ago