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Walmart’s first-quarter profit slipped, and it said it must raise prices due to higher costs from tariffs implemented by US president Donald Trump.
The nation’s largest retailer posted strong quarterly sales on Thursday and said it expects sales growth of 3.5% to 4.5% in the second quarter.
But like many other US companies, it did not issue a profit outlook for the quarter because of the chaotic environment, with stated US tariff policies changing constantly. The company maintained its full-year guidance issued in February.
Many Americans have pulled back on spending as they grow uneasy about the economy.
Government data revealed slowing sales growth for retailers on Thursday.
Walmart said on Thursday that its consumers remain cautious and selective.
Mr Trump’s tariffs on China and other countries threaten the low-price model that is at the core of Walmart’s success.
Mr Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced on Monday, with some of the higher tariffs on pause for 90 days.
Retailers and importers had largely stopped shipping shoes, clothes, toys, and other items with the duties so high, but many will now resume importing from China in the narrow window, hoping to avoid sparse shelves this autumn.
Yet many retailers say they must raise prices to absorb tariff costs.
And they are also bracing for higher shipping costs fuelled by a surge of companies scrambling to get their goods on ships to the US.
Walmart has built in hedges against some tariff threats. Two-thirds of Walmart’s merchandise is sourced in the US, with groceries driving much of that. Groceries account for roughly 60%, of Walmart’s US business.
Still, Walmart is not immune.
“We will do our best to keep our prices as low as possible,” Walmart’s chief executive Doug McMillon told industry analysts on Thursday.
“But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.”
Mr McMillon said price increases on the shelves will feel more gradual, but they had already begun as early as April, and they accelerated in May. The company said it has been focused on back-to-school receipts.
He added that it imports general merchandise from all over the world from dozens of countries. But China, in particular, represents a big chunk of volume in certain categories such as electronics and toys.
Tariffs on countries such as Costa Rica, Peru and Colombia are raising costs on groceries including bananas, avocados, coffee and roses, he said.