Publicado: Sáb, May 18, 2019
Financiera | Por Marilu Caballero

Walmart says higher tariffs will push prices higher

Walmart says higher tariffs will push prices higher

Walmart and others have benefited from a continued strong economy and low unemployment, but shoppers continue to look for deals. That's who we are.

Walmart isn't the only major retailer to warn that increased tariffs will mean increased prices for consumers.

"We're monitoring the tariff discussions and are hopeful that an agreement can be reached", said Chief Financial Officer Brett Biggs.

He said the company will try to ease the pain, in part by working with suppliers' "costs structures to manage higher tariffs".

The comments came after the nation's largest retailer reported its best sale performance at its established USA namesake stores for the fiscal first quarter in nine years. Much of the products sold by Walmart come from the US and South America. Target imports 34% of its products from China. Other companies, including sporting goods, auto parts and furniture sellers, have even greater exposure to China. China retaliated on Monday, saying it will raise tariffs on $60 billion of American-made imports on June 1. That mostly impacted industrial materials, but things like luggage, hats and gloves were also affected.

Additionally, the United States has started a formal process to put new tariffs in place on the remaining exports coming from China that aren't already taxed.

Similar to other US retailers, the threat of additional tariffs on Chinese goods such as apparel and footwear weigh heavily on Walmart as it looks to the remainder of the year. Macy's on Wednesday said it will increase the prices on some merchandise because of the trade war with China.

"If the potential fourth tranche of tariffs is placed on all Chinese imports, that will have an impact on both our private and our national brands", CEO Jeff Gennette told analysts on an earnings call.

Despite companies raising or considering increasing prices for consumers, Pres. Trump maintains that such price hikes are unnecessary.

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Tariffs pose an obstacle for Walmart, one of the strongest retailers in the United States.

Sales at Walmart's USA stores open at least a year rose 3.4%, excluding fuel, in the quarter ended April 30.

Comparable sales at U.S. stores - a key retail-sector benchmark closely-watched by Wall Street - jumped 3.4 per cent, marking the company's best performance in nine years, the company said.

US e-commerce business rose 37%, helped by strong sales in fashion and home goods.

Chief executive Doug McMillon highlighted the strong U.S. figures, which come as the company ramps up programs to allow customers to pick up groceries that are ordered online and provide more direct delivery of goods.

"We're changing to enable more innovation, speed and productivity, and we're seeing it in our results", CEO Doug McMillon said in a statement.

Operating income fell 4.1 per cent to US$4.9 billion, in part because of Walmart's purchase of Indian e-commerce start-up Flipkart past year.

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

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