Walmart says it will raise prices because of tariffs

by



[ad_1]

"We will continue to do everything in our power to keep prices down, which is what we are, but an increase in rates will result in higher prices, in our opinion, for our customers." Walmart's chief financial officer, Brett Biggs, told reporters during a phone call that the retailer had released its results for the first quarter of 2019.

Biggs did not specify which items would become more expensive at Walmart. He noted, however, that Walmart merchant teams had developed strategies to limit cost increases and were working with suppliers to manage prices.

Walmart is less exposed in China than many other retailers because more than half of its sales come from grocery products. Most of the food sold by Walmart comes from the United States and other regions such as South America.

But Walmart (WMT) According to him, Michael Lasser, an analyst at UBS, still imports 26% of his goods from China. Target (TGT) imports 34% of its products from China. Other companies, including sporting goods sellers, auto parts and furniture, are even more exposed to China.
Last week, the Trump administration raised tariffs on $ 200 billion worth of products made in China. Tariffs were mainly for industrial materials and components, but also for the luggage, hats and gloves of US importers.
In addition, the United States has launched a formal process to introduce new tariffs on remaining exports from China that are not already taxed. This could make a number of products, including toys, clothes and sneakers, more expensive for US consumers.
Retailers rely heavily on China in their supply chain. China accounted for about 41% of all clothing, 72% of all footwear and 84% of all travel goods imported to the United States in 2017, according to a letter sent by several retail groups to the United States. Trump administration last week.

Other retailers have also recently warned that tariffs would impose negative consequences.

On Wednesday, Macy's said he would raise prices for some goods because of the trade war with China.

"If the fourth tier of tariffs is applied to all imports from China, it will impact both our private brands and our national brands," Jeff Gennette, chief executive, told analysts. He added that it would be difficult for Macy's to "find a way" to avoid raising consumer prices.

Walmart is up

Rates are an obstacle for Walmart, one of the most powerful retailers in the United States.

In its first quarter, Walmart's US store sales increased by 3.4% or more over the same period last year. This marked the fourth consecutive quarter of Walmar sales growth above 3% in stores open at least a year.

"US companies continue to benefit from a healthy economic environment," Chief Financial Officer Biggs said Thursday in a statement.

Walmart 's online sales growth reached 37% in the last quarter, a rate slightly lower than the 40% recorded last year. Walmart has intensified its online grocery business and acquired fashionable fashion brands such as Bonobos and Eloquii. Online grocery shopping and delivery has boosted online sales, according to the company.

"We are delighted with the way we started the year," said General Manager Doug McMillon. "We have a stronger base in place with our stores and we are doing well in e-commerce."

An analyst on Thursday attributed Walmart's strength to its decision to continue lowering prices, despite higher costs and investments in redeveloping stores and building its online infrastructure.

"Buyers are now more price sensitive, which is one of Walmart's key strengths," said Neil Saunders, Managing Director of GlobalData Retail in a note to customers.

Katie Lobosco of -CNN Business contributed to this article.

[ad_2]

Source link