Walmart is pulling its first-quarter operating income outlook due in part to tariff-related concerns.
“The range of outcomes for Q1 operating income growth has widened due to less favorable category mix, higher casualty claims expense and the desire to maintain flexibility to invest in price as tariffs are implemented,” the retail giant said in a news release Wednesday (April 9).
Walmart had forecast operating income of 0.5% to 2% for the first quarter when it released fourth-quarter earnings results in February. The company is scheduled to release its full earnings May 15.
Walmart said it expects first-quarter sales growth to be in line with a 3% to 4% outlook, with annual sales and operating income growth guidance unchanged, per the release, timed to coincide with the company’s Investment Community Meeting.
The announcement came the same day that President Donald Trump’s steep tariffs went into effect, impacting some of the nations that Walmart relies on to source its goods. This includes a 104% tariff on products from China and 46% duties on goods from Vietnam.
Walmart has reportedly been trying to lessen the blow of the tariffs by lobbying suppliers to cut prices. Despite talks with the Chinese government and warnings of potential retaliation, the retail giant has apparently asked suppliers in China to reduce prices by as much as 10% per tariff round. The measure is designed to preserve Walmart’s reputation for low prices even in the face of rising economic pressures.
“These negotiations come at a time when tensions between the United States and China continue to cast uncertainty over international trade,” PYMNTS wrote last week. “Walmart’s strategic response underscores its dedication to maintaining cost competitiveness, even if it requires pushing suppliers to absorb part of the economic burden. It is a high-stakes gamble aimed at securing price stability for its vast customer base.”
Artificial intelligence can help companies navigate tariff-related difficulties, including strains on buyer-supplier relationships. With AI, businesses can improve buyer resiliency and scenario planning, Coupa Software CEO Leagh Turner told PYMNTS.
For example, companies can “tap into buyer-supplier networks to run different scenarios to find near-shore or offshore suppliers, negotiate terms and reroute supply chains,” she said.
