Walmart (NYSE:WMT) warned on Thursday that it will begin raising prices later this month as new U.S. tariffs drive up costs, even as its first-quarter U.S. same-store sales beat expectations. Despite the caution, shares in the retail giant edged 0.5% higher in early trading and remain up over 60% year-over-year.
The company chose not to issue profit guidance for the second quarter, citing the unpredictability surrounding recently reimposed tariffs under former President Donald Trump’s trade policies. Instead, Walmart maintained its full-year fiscal 2026 outlook, projecting adjusted earnings per share between $2.50 and $2.60 and sales growth of 3% to 4%.
Speaking to CNBC, Chief Financial Officer John David Rainey said American consumers should expect to see higher prices hitting shelves by the end of May or early June. CEO Doug McMillon added in a statement that the retailer would work to minimize the impact on customers, but admitted that the company cannot fully absorb the additional costs due to its thin margins – even after the recent tariff reductions.
Industry analysts believe Walmart is better positioned than many competitors to manage the pressure. “They can use their scale, optimize supplier relationships, and boost efficiencies, but those levers have limits,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Joseph Feldman of Telsey Advisory Group noted that Walmart’s expansive product assortment gives it flexibility to implement selective price hikes. “They’re likely to handle tariffs better than most other retailers and still produce healthy profits,” he said.
Despite ongoing trade uncertainty, Walmart delivered strong Q1 results. U.S. comparable store sales grew 4.5%, exceeding analyst forecasts of 3.94%, according to LSEG data. The growth came from a 1.6% increase in foot traffic and a 2.8% rise in average ticket size, with customers buying more food staples, household essentials, and personal care products.
Net revenue climbed 2.5% to $165.6 billion, slightly below Wall Street estimates. Meanwhile, U.S. e-commerce sales jumped 21%, and global online sales rose 22%. Notably, Walmart’s e-commerce operations achieved full-quarter profitability for the first time, thanks to growth in high-margin segments like digital advertising and its online marketplace.
The company posted adjusted earnings of 61 cents per share, beating consensus expectations of 58 cents. For Q2, it expects total net sales to increase between 3.5% and 4.5%, topping analyst estimates of 3.46%.
However, Rainey said Walmart will not provide Q2 earnings or operating income forecasts due to the volatile trade environment. “The near-term landscape is unusually fluid, but we’re confident we can meet our full-year goals,” he said.
Walmart’s report underscores broader concerns about consumer spending and economic resilience. April marked the fourth consecutive month of declining consumer sentiment, while the U.S. economy contracted in Q1 for the first time in three years – raising the specter of a potential recession.
As the first major U.S. retailer to report quarterly earnings, Walmart’s results serve as a barometer for consumer strength amid shifting economic winds and continued geopolitical uncertainty.