Despite a Strong First Quarter, Walmart Concedes Tariffs Are Pushing Up Prices

Walmart Inc., the retail powerhouse, delivered better-than-expected financial results for its fiscal first quarter, outperforming on all major performance indicators and reaffirming its outlook for the rest of the fiscal year. Despite this strong performance, the company acknowledged ongoing challenges related to tariffs, which could lead to pricing pressures in certain product categories.

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During Thursday’s earnings call, Walmart Chief Executive Doug McMillon highlighted the company's biggest short-term obstacle: managing the financial impact of U.S. tariffs. “We’re committed to keeping our prices as low as we can,” he said, “but the scale of these tariffs—even after the recently announced reductions—is too large for us to completely absorb, especially considering our already narrow retail margins.”

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McMillon noted that Walmart began to feel the effects of tariffs across several markets starting in late April, with the pressure accelerating in May. He emphasized the company’s goal of keeping prices low on food and everyday essentials, especially as food inflation in the U.S. has remained persistent in recent years, impacting consumers' wallets. “Customers have been experiencing that strain for quite a while,” he added.

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Despite these pressures, McMillon made it clear that Walmart is not allowing higher costs from tariffs on general merchandise to spill over into food prices. That said, he acknowledged that tariffs on imports from countries such as Costa Rica, Colombia, and Peru are affecting prices on specific grocery items like avocados, bananas, coffee, and flowers. “We’ll manage what we can,” he explained, “including efforts like reducing waste in our fresh food sections.”

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As an example of Walmart’s pricing strategy, McMillon mentioned that even with increased costs, Sam’s Club maintained its usual pricing for Mother’s Day flowers, demonstrating the company’s commitment to price stability during important seasonal moments.

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While concerns about tariffs and potential supply chain disruptions persist, Walmart joins other companies reporting solid consumer demand. Some analysts have even warned of the possibility of product shortages due to global trade tensions, but so far Walmart has managed to navigate these challenges without major setbacks.

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Following the earnings release, Walmart shares slipped 0.8% in premarket trading, and eventually fell 3.78% by the close.

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For the quarter ending April 30, adjusted earnings per share climbed to 61 cents, slightly higher than the 60 cents posted a year earlier. This result also surpassed analysts’ consensus estimate of 58 cents, as compiled by FactSet. Notably, it marked Walmart’s 12th consecutive quarter of earnings beats.

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Total revenue rose 2.5% year-over-year to $165.6 billion, just slightly missing the FactSet forecast of $165.69 billion. In its core U.S. business, Walmart’s net sales increased 3.2% to $112.2 billion, narrowly missing the $112.6 billion projected by analysts. However, comparable same-store sales in the U.S. grew 4.5%, beating expectations of a 3.8% gain.

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Walmart also experienced growth in store traffic and spending. Transactions at U.S. locations rose 1.6%, while the average ticket size climbed 2.8%. The company reported strong sales in grocery and health & wellness categories, with seasonal events like Mother’s Day also helping boost performance.

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Meanwhile, Sam’s Club, Walmart’s membership-based warehouse division, reported a 2.9% increase in net sales to $22.1 billion, slightly below the FactSet forecast of $22.3 billion.

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However, comparable-store sales at Sam’s Club jumped 6.7%, far exceeding the 4.5% estimate. Transactions were up 4.8%, and the average ticket value grew by 1.7%. Growth was again led by grocery and health & wellness, and general merchandise sales were positive for the fourth consecutive quarter.

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Looking ahead, Walmart maintained its full-year guidance, projecting net sales growth between 3% and 4%, and adjusted earnings per share in the range of $2.50 to $2.60. For the second quarter, the company expects constant currency sales growth of 3.5% to 4.5%.

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So far in 2025, Walmart’s stock has gained 7.2% through Wednesday, outperforming broader consumer staples stocks. The Consumer Staples Select Sector SPDR ETF is up 1.1% over the same period, while the Dow Jones Industrial Average has declined 1.1%.

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The broader consumer discretionary sector also saw a lift this week after the U.S. and China reached a preliminary agreement to implement tariffs on Chinese goods at a 30% rate—lower than initially feared. While Walmart continues to express concern about tariffs, the company’s operational resilience and strong consumer demand have kept it on solid footing heading into the rest of the fiscal year.

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