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Walmart Reports Q1 Fiscal 2020, Warns of Increased Prices Due to Tariffs

Walmart Reports Q1 Fiscal 2020, Warns of Increased Prices Due to Tariffs


BENTONVILLE, AR
Friday, May 17th, 2019

Last week, retail giant Walmart reported better-than-expected Q1 fiscal 2020 results, touting robust growth for the company’s U.S. operations and eCommerce division.

Walmart’s conference call, though, offered a caveat to the retailer’s forward momentum—Walmart noted that it may have to increase prices as a result of tariffs leveled on China by the United States.

In a conference call Thursday, May 16, Walmart U.S. President and CEO Greg Foran and Brett Biggs, EVP and Chief Financial Officer of Walmart, detailed the company’s plans to address the potential of price increases.

Greg Foran, U.S. President and CEO, Walmart“We continue to be customer centric and we will win with our customers. We will maintain price leadership in the marketplace and merchants are managing costs and retails on an item-by-item basis,” said Foran. “We are working closely with domestic and international suppliers to drive higher efficiency and reduce costs, and of course, our diverse product assortment at stores allows us to manage mix across the business. We’re a large global sourcing organization so we continuously look for best costs around the world.”

Biggs noted that the impact of price increases is not expected to do tremendous harm to the company’s bottom line—but noted the potential impact of increased prices and narrowing margins on the retailer and the concern with which the company was treating the tariff situation.

Brett Biggs, EVP and Chief Financial Officer, Walmart“In regards to tariffs, we continue to monitor the situation. Our goal is always to be the low price leader and we’ll continue to actively manage pricing and margins with our customers and shareholders in mind,” said Biggs. “…We’re going to continue to do everything we can to keep prices low, that’s who we are. However, increased tariffs will lead to increased prices we believe for our customers. So overall, we’re really pleased with the results. It puts us in a good position to achieve our full-year goals. Our underlying business is really strong and the omni strategy is working. And it’s been our practice that we will update certain full year guidance with our Q2 release.”

Walmart noted that it may have to increase prices as a result of tariffs leveled on China by the United States

Highlights from the company’s Q1 fiscal 2020 include:

  • Total Revenue was $123.9 billion, an increase of $1.2 billion, or 1.0%. Excluding currency, total revenue was $125.8 billion, an increase of $3.1 billion, or 2.5%
  • Walmart U.S. comp sales of 3.4% marked the company’s best Q1 comp in 9 years and is the fourth consecutive quarter above 3%. Operating income was better than expected, up 5.5%
  • Walmart U.S. eCommerce sales growth of 37% reflected strong growth in online grocery, as well as the Home and Fashion categories on Walmart.com

Doug McMillon, President and CEO, Walmart“We're changing to enable more innovation, speed, and productivity, and we're seeing it in our results. We're especially pleased with the combination of comparable sales growth from stores and eCommerce in the U.S.,” said Doug McMillon, President and CEO of Walmart. “Our team is demonstrating an ability to serve customers today while building new capabilities for the future, and I want to thank our associates for a strong start to the year.”

Will tariff-based price increases affect Walmart’s bottom line? Check back with us at Deli Market News for updates.

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