Walmart said Thursday that sales at its U.S. stores rose nearly 5 percent in its most recent quarter, a better-than-expected result that suggests shoppers squeezed by inflation and wary of economic uncertainty continue to flock to the retailer for staples and other goods.
As the largest retailer in the United States, Walmart is considered a bellwether for the state of the consumer. Recent results from rivals have been mixed, but Walmart’s earnings were relatively upbeat, showing sales “momentum,” according to Doug McMillon, the company’s chief executive.
Foot traffic rose and the amount shoppers spent per visit grew even faster in the quarter ending in July. The company’s e-commerce sales jumped more than 25 percent over the previous year.
As a result, Walmart raised its full-year sales forecast and affirmed its guidance for operating profit growth.
The company’s latest quarter covered a period during which U.S. tariffs on a broad range of imports hit retailers like Walmart with extra costs. Many businesses have been able to absorb the added expenses, by adding to inventories before the tariffs took effect and reorganizing supply chains. But as time goes on, companies are under pressure to pass the cost of tariffs onto consumers through higher prices.
Executives at Walmart have previously warned that tariffs were likely to lead to higher prices for consumers, which drew criticism from President Trump, who publicly called on the retailer to “EAT THE TARIFFS.”
Other retailers that reported earnings this week discussed different approaches to dealing with tariffs. TJX, the parent company of TJ Maxx, Marshalls and HomeGoods, on Wednesday said it expanded its inventory by 10 percent last quarter, suggesting that it can work through a stockpile of goods that it bought before the steepest tariffs took effect. Home Depot said Tuesday tariffs may soon begin to impact its pricing strategy.
Target said Wednesday that its sales and profit fell last quarter, and because of uncertainty related to tariffs, it did not buy back any of its shares. It would raise prices “as a last resort,” its chief commercial officer told analysts. The company also named a new chief executive in an attempt to break its sales slump.
The latest government data showed inflation picking up last month, particularly on items exposed to tariffs like furniture, appliances and footwear. Anticipating higher prices, many Americans raced to buy imported products earlier in the year. Price increases on regular purchases, like groceries, are expected to hit shoppers sooner.
Analysts say that if Walmart, which is known for low-cost merchandise, starts raising prices, it could signal a broader trend — and open the door for others to follow.
Walmart executives noted earlier in the year that about two-thirds of its U.S. sales came from domestically sourced goods, offering some insulation from the effects of tariffs. Still, prolonged tariffs represent a significant risk to the company, said Bryan Hayes, strategist at Zacks Investment Research.
“Tariffs won’t have a huge effect on their bottom line given their scale and supplier relationships, but it will likely make some dent,” said Melina Murren Vosse, assistant professor of finance at the University of San Diego’s Knauss School of Business.