Get ready to pay more for your next Walmart run.
Walmart executives warned Thursday that price increases, which started to show up in April, were likely to stack up further thanks to President Donald Trump's ongoing trade war.
"Even at the reduced levels, the higher tariffs will result in higher prices," CEO Doug McMillon said on the company's first quarter earnings call.
In spite of the trade chaos, Walmart delivered strong results that underscore its view that tough times represent an opportunity to gain new customers. Actual first-quarter revenues were $165.6 billion, or $168 billion on a constant currency basis, and profits ticked up 3% to $7.3 billion.
US sales were lifted by shoppers rushing to get ahead of any price hikes related to new tariffs on China and other countries announced during the quarter.
Year-over-year foot traffic to Walmart stores was up an estimated 4.5% in April, according to Placer.ai, after being down in February and March, probably because of shopper concerns about prices and supply constraints.
The stock rose 2.6% in premarket trading following the results.
In an interview with CNBC after the earnings were released, Walmart's chief financial officer, John David Rainey, said shoppers should expect higher prices in the near future.
"We're wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb," he said.
"It's more than any supplier can absorb. And so I'm concerned that the consumer is going to start seeing higher prices. You'll begin to see that, likely towards the tail end of this month, and then certainly much more in June."
Walmart also reported major growth in revenue from its membership programs, with global membership fee income up nearly 15%. The company doesn't disclose publicly how many Walmart+ members it has, but Barclays estimates the number to be more than 15 million.
CEO Doug McMillon gave a preview of the results in early April at Walmart's investor meeting, shortly after President Donald Trump ratcheted up tariffs on imports from China.
McMillon said that two-thirds of what Walmart sells in the US is sourced domestically and that the retailer's broad product assortment and experienced merchandising teams were well-suited to handle the uncertainty.
"We'll just manage it in a way that mix becomes a strength," he said.
Rainey also said at the time that fluid situations like this one had historically seen Walmart win customers over from rival retailers.
"If you look back two years ago when we saw inflation, we invited a lot of new customers to Walmart," he said. "We have a similar opportunity today."
