Walmart Fears Tariffs Despite Profit Beat
Walmart (WMT) investors are concerned about the impending tariffs, outweighing the company's recent earnings exceedance.
CFO John David Rainey remains optimistic, stating, "We're not immune to this [tariffs], but we typically work with suppliers on this. We'll shift supply where we need to."
Walmart boasts that two-thirds of its annual product expenditure is sourced and manufactured in the US, reducing its exposure to imports.
However, Rainey acknowledges that general merchandise is "more dependent on a country like China." The Trump administration recently imposed a 10% tariff on Chinese imports, with a 25% tariff on Mexico and Canada on hold.
Walmart has not yet raised prices but may pass some increases to consumers if costs escalate. The company's conservative guidance for fiscal year 2026 reflects uncertainty surrounding tariffs and the macro environment.
Analysts believe that Walmart's scale allows it to maintain margins despite any further tariffs. Rising inflation may also drive more budget-conscious shoppers to Walmart.
The company's focus on lower prices, particularly with its private labels, will help alleviate the impact of any price hikes for consumers.
However, Walmart may experience challenges in certain markets, such as Mexico, due to shifts in consumer behavior and a potential move to informal markets.