Walmart Inc. (WMT) delivered a solid first-quarter performance, surpassing Wall Street expectations on earnings and U.S. sales.
But any optimism was tempered by warnings of looming price hikes and economic unpredictability tied to U.S. trade policy.
For the quarter ended April, Walmart posted adjusted earnings of $0.61 per share, beating consensus forecasts of $0.58, and reported revenue of $165.6 billion, up 2.5% year over year. U.S. same-store sales rose 4.5%, well above the 3.85% analysts expected, with health, wellness, and grocery categories driving growth. E-commerce also played a significant role, with online sales up 22%—marking the first quarter of global profitability for that segment.
Despite the beat, Walmart shares opened sharply lower Thursday, dropping 5% in early trading as executives warned of rising costs driven by tariffs and “substantial uncertainty” for the year ahead. The stock was down 3.2% by mid-morning.
Tariff Turbulence Threatens Margins
The main source of Walmart’s caution is the unpredictable state of global trade. President Trump’s shifting tariff policies—particularly those affecting imports from China, Latin America, and North America—have already begun to increase input costs, with more pronounced effects expected by the end of May and into June.
“Even at the reduced levels announced this week, we aren’t able to absorb all the pressure,” said CEO Doug McMillon, pointing to the challenge of narrow retail margins. CFO John David Rainey warned that if the previous 145% tariffs on Chinese goods return after the current pause, Walmart’s ability to grow earnings could be jeopardized.
While Walmart applauded the recent de-escalation in the U.S.-China trade dispute, which brought tariffs on Chinese imports down to 30%, executives made clear that the pressure remains intense. Products like electronics and toys—heavily sourced from China—will see prices rise. Grocery items such as bananas, avocados, and coffee are also under pressure from new tariffs on imports from countries like Costa Rica and Colombia.
Rainey also noted that even a short-term reduction in tariffs doesn't undo the costs retailers incur when products enter U.S. customs: “Even if the tariff rate comes down later, the cost has been elevated.”
The main source of Walmart’s caution is the unpredictable state of global trade. President Trump’s shifting tariff policies—particularly those affecting imports from China, Latin America, and North America—have already begun to increase input costs, with more pronounced effects expected by the end of May and into June.
“Even at the reduced levels announced this week, we aren’t able to absorb all the pressure,” said CEO Doug McMillon, pointing to the challenge of narrow retail margins. CFO John David Rainey warned that if the previous 145% tariffs on Chinese goods return after the current pause, Walmart’s ability to grow earnings could be jeopardized.
While Walmart applauded the recent de-escalation in the U.S.-China trade dispute, which brought tariffs on Chinese imports down to 30%, executives made clear that the pressure remains intense. Products like electronics and toys—heavily sourced from China—will see prices rise. Grocery items such as bananas, avocados, and coffee are also under pressure from new tariffs on imports from countries like Costa Rica and Colombia.
Rainey also noted that even a short-term reduction in tariffs doesn't undo the costs retailers incur when products enter U.S. customs: “Even if the tariff rate comes down later, the cost has been elevated.”
Cautious Outlook Amid Macro Volatility
Walmart reiterated its full-year guidance for fiscal 2026, projecting revenue growth of 3% to 4% and adjusted earnings per share between $2.50 and $2.60. However, the company declined to provide earnings guidance for the second quarter, citing “the dynamic nature of the backdrop” and the difficulty of forecasting outcomes in the face of volatile trade policies.
Inventory levels rose 3.8% in the quarter, slightly above expectations, as Walmart and other retailers appear to be stockpiling goods ahead of potential tariff escalations. With producer and consumer prices relatively muted in April, the real impact of tariffs may not be visible until later this summer. But the company expects price hikes to begin in earnest by the end of May.
Walmart’s size and supplier relationships give it more flexibility than smaller competitors to manage through the turbulence. Analysts at BofA Securities (BAC) and UBS agree the company is better positioned to weather the storm, pointing to its strong grocery base, expanding e-commerce operations, automation investments, and growing alternative revenue streams such as advertising.
Walmart reiterated its full-year guidance for fiscal 2026, projecting revenue growth of 3% to 4% and adjusted earnings per share between $2.50 and $2.60. However, the company declined to provide earnings guidance for the second quarter, citing “the dynamic nature of the backdrop” and the difficulty of forecasting outcomes in the face of volatile trade policies.
Inventory levels rose 3.8% in the quarter, slightly above expectations, as Walmart and other retailers appear to be stockpiling goods ahead of potential tariff escalations. With producer and consumer prices relatively muted in April, the real impact of tariffs may not be visible until later this summer. But the company expects price hikes to begin in earnest by the end of May.
Walmart’s size and supplier relationships give it more flexibility than smaller competitors to manage through the turbulence. Analysts at BofA Securities (BAC) and UBS agree the company is better positioned to weather the storm, pointing to its strong grocery base, expanding e-commerce operations, automation investments, and growing alternative revenue streams such as advertising.
Yet executives remain realistic. “We won’t let tariff-related cost pressure on some general merchandise items put pressure on food prices,” McMillon pledged. But he added: “There are certain categories we’re dependent upon to import. Prices of those things are likely going to go up. And that’s not good for consumers.”
As trade policy continues to shift, Walmart’s performance may serve as a bellwether for the broader retail sector. Target (TGT), Home Depot (HD), and Lowe’s (LOW) are all set to report earnings next week. For now, Walmart remains a fortress in a storm—but even fortresses aren’t invincible.
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