Courtesy of Walmart
April 10, 2025
Is Walmart Correct To Put a Positive Spin on Tariff Impacts?
As markets roiled, with the S&P 500 being down 3.53% and the Nasdaq down 4.16% as of 3:55 p.m. ET on April 10, at least one U.S. retailer remained stoic — perhaps even optimistic — in the face of macroeconomic turbulence.
According to Fortune, Walmart CEO Doug McMillon and other company execs took to the stage at the retailer’s annual investor community meeting in Dallas, Texas, on Wednesday to discuss the company’s immediate fortunes and future.
McMillon quickly moved to speak to the elephant in the room, namely the issue of President Donald Trump’s tariffs, those issued by competing nations in retaliation, and the impact these might have on Walmart’s bottom line.
“Nothing about the current environment impacts our confidence in our business or our strategy,” McMillon said, before he and other Walmart personnel shifted the conversation to focus on the company’s growth strategy.
“I’ve seen us navigate through tough times after 9/11, the Global Financial Crisis, and the pandemic,” he added.
While Walmart stock ticked upward by about 3% in early morning trading, by 4:21 p.m. ET, it had fallen to be relatively flat, up just 1.1%.
Walmart Retains Sales Growth Guidance but Hesitates To Offer Operating Income Projections
Walmart remained steadfast in its projections of net sales growth of between 3% and 4% for Q1 2025 but hedged its bets somewhat by pulling back guidance on operating profit for the same quarter.
“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,” an April 9 corporate news release read.
Still, as CFO John David Rainey underscored, Walmart benefits greatly from having two-thirds of what Walmart U.S. sells produced domestically, with the lion’s share of the remainder being sourced from China and Mexico. And as Fortune pointed out, Walmart — being the largest grocer in the United States — is less susceptible to tariff concerns as opposed to those retailers who lack the same strength in grocery, such as Macy’s and Target.
Fortune quoted Rainey as suggesting that Walmart is willing to “take the hit” on prices, given its renown as a low-price leader to the point of it being part of its foundational brand image, and exit the current tariff tumult in a stronger position than its competitors.
“History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,” Rainey said.
For his part, McMillon described the situation as “fluid,” reinforcing that Walmart had not canceled any orders from China, at least to his knowledge. A reduction in future purchases from China could be on the table, though, he admitted.
“The rate of sale may change on certain items because of the way tariffs are playing out, and we will adjust that as we go,” he said, per The Financial Times.
He indicated that he had not spoken to President Trump over the course of the past week on the subject of tariffs but noted the possibility of doing so in the future: “We’ll see how things go.”
Analysts React, Indicating Walmart Is Well-Positioned Despite Overall Market, Macroeconomic Anxieties
Industry analysts and onlookers were quick to chime in with thoughts over Walmart’s prospects in navigating the ongoing tariffs, with most of these suggesting that while Walmart could see damage done to its balance sheet, it was better equipped to weather the storm compared to its peers in the retail and grocery segments.
The FT cited Justin McAuliffe — research analyst at Gabelli Funds, a Walmart shareholder — as saying: “If something is not negotiated with China, that’s going to be a pretty significant headwind for Walmart on an absolute basis. But on a relative basis, Walmart is probably one of the best positioned to deal with tariffs.”
Said negotiations could be fraught, with Walmart execs already having been summoned to a meeting with Beijing officials over the matter of the company allegedly pressuring suppliers to slash prices following the levying of U.S. tariffs on China.
TipRanks quoted analyst Michael Baker as saying that Walmart’s commitment to low-price leadership, even in the face of tariff pressure, “could help it win more market share.”
TipRanks suggested that Wall Street had a general “buy” consensus regarding Walmart, with 28 “buy” ratings, two “hold” ratings, and zero sell ratings being aggregated by the outlet.
An aggregate share price target of $110.30 was in place for April 10, showing a 21.73% upside for the blue-and-yellow brand versus current price levels.
Discussion Questions
Should Walmart be as publicly optimistic over its ability to navigate the tariff situation as it has been? Why or why not? Is this optimism warranted?
What potential dangers await Walmart should its sunny projections turn sour if the trade war intensifies and/or becomes prolonged? Will its size and economy of scale allow it to escape the brunt of economic damage?
Is it fair to compare the current tariff situation to socioeconomic events such as the global financial crisis or the COVID-19 pandemic? Why or why not?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Cathy Hotka
Principal, Cathy Hotka & Associates
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
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Walmart has not said tariffs are good. Indeed, it has withdrawn its first quarter profit guidance in light of the uncertainty. However, there are some fundamentals that give Walmart some upside. First, tariffs impact every retailer so even if prices rise overall, relative positionings in terms of price will be maintained – and Walmart will remain a low-price leader. Second, that price leadership becomes even more important as consumers get squeezed, and that will help Walmart win more custom. Third, as a huge business Walmart has more levers to pull to mitigate cost increases: more places to find savings, more areas to automate, more negotiating power with suppliers and so forth. Walmart emerges from this in a better place than many.
This might be viewed a follow-up topic to yesterday’s Which Retailers Are Best Positioned To Withstand Tariffs ? (Gee, it’s almost like being back in 1983 when we had to wait until the next day to see the answer… what “33 down”- Peruvian bee keeper – was!)
“To hear the answer now please call 1-800-RETAILWIRE”
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Projecting an aura of confidence is always a good idea, even when the global economy is teetering. Walmart’s massive supply chain should allow the company wide leeway to shift sourcing. I can only imagine, though, what their Washington lobbying team is going through.
or especially when the global economy is teetering
Speaking of messaging, I would dispute that WalMart put a positive spin on Tarriff impacts: “we’re going to be one of the survivors” is the type of factually likely -and politically neutral – statements that the C-suite is paid the big bucks to deliver; and I don’t feel they said anything more than that.
First, let me compliment RetailWire journalist Nicholas Morine on this coverage.
Walmart has good reasons to anticipate that it can emerge from the present tariff uncertainties in a better position than many of its retail competitors:
Scale definitely has its advantages. The Great Wal has greater resources to remain patient and position itself for the next (uncertain) chapter. I’m confident it will find ways to emerge with market share gains.
Respectfully, the US Food business is absolutely influenced by foreign trade, especially perishables. Long term, the US domestic supply will be disrupted if US farmers lose access to Chinese markets alone. Last administration that amounted otherwise around $27B in lost sales.
And adding on to Gary’s comment, collapse of the farm workforce due to wild and fear-inducing ICE actions & not having a reliable immigration system will hit national grocers harder than regional chains who rely on local supply. And has been often said, you can’t grow coffee or avocados in Alabama.
It’s not just this. A farm has machinery. Where does that machinery and its parts come from? Produce from a farm has to be transported. Where do the trucks and the parts for the trucks come from? Now we’re at the processing factory. Where does the equipment and packaging come from? And so it goes on. These secondary impacts of tariffs matter and they will push up prices.
Walmart might use the tariffs as an opportunity to boost domestic production and sourcing, which could create more jobs and drive economic growth in the United States.
They may also emphasize their skill in negotiating better deals with suppliers to reduce the impact on consumer prices. By focusing on these strengths, Walmart can showcase its resilience and adaptability in navigating global trade challenges.
Additionally, Walmart’s commitment to domestic sourcing could enhance its reputation as a socially responsible company, appealing to consumers who prioritize locally made products. This strategic shift may also strengthen relationships with local suppliers, fostering long-term partnerships that benefit both Walmart and the broader U.S. economy.
Walmart is well positioned to weather the tariff storm (and many others) which should not be confused with a growth outlook. The current environment isn’t about uncertainty (that is a given), it is about clarity. What is the goal? What is the timeline? This nebulous territory is hard to navigate and a test of the business model diversification bulwark that Walmart intentionally and presciently built.
This isn’t spin, and I wouldn’t even call it being optimistic. It’s being transparent and it’s being resolute. The magnitude of the tariff scenario is surprising, if not shocking, everybody. Walmart is simply standing tall and saying that they are not going to disappoint their customers. They will absolutely maintain their price and value leadership. Given the downhill trajectory many customers will probably have to take, Walmart is comfortable with their sales outlook. But of course it will cost them margin. How could any retailer who buys imported product project forward margins at this point?
No, it’s not fair to compare this tariff scenario with any former crisis or pandemic. This crisis scenario was 100% self induced, and 100% unnecessary. Tariffs could have been challenged and renegotiated without creating this level of chaos and trauma for retailers and customers alike. To say nothing about our now frayed relationships with pretty much the rest of the globe. And this was urgent because we were overdue in solving our trade deficit…??? We consume more than we can manufacture at home. And we just spent several decades working feverishly to send manufacturing oversees, all in the name of profit. And this ‘solution’ won’t be doing anybody’s bottom line any favors. We had to solve the trade deficit, but our current administration wants a budget that will raise the debt ceiling by 5 trillion dollars, while they talk about slashing government spending. Nothing about any of this makes sense. So no, it doesn’t compare with former crisis situations.
Walmart is in a good position vis-a-vis other retailers. While their customers will be hurt by tariffs and the coming inflation, they will still see Walmart as a good alternative. Where Walmart stands in the customer’s mind relative to others will not change.
On the financial side, except for possible slight volume losses, Walmart will make a lot of money. As prices go up, margins go up, but basic costs do not. There may even be enough margin to add another $1/hour to associates’ pay
Positive in that Walmart has built a strong value prop and as middle-class shoppers feel the need to trade down to lessen the impact of import taxes on their family budgets, Walmart certainly stands to gain from that shift.
Two significant differences between the tariff crises and COVID-19 or the global financial crisis- this crisis in manufactured by politicians and could be over in 1 minute if there was a desire to do so. In my opinion, the causes of the previous crisis were understood; even insiders in this administration don’t understand what’s happening or how it can be alleviated.
As in the past, Walmart is well positioned to gain share as consumers tighten their belts. That is not the same as being optimistic about overall consumer spending while uncertainty about tariffs hangs over the economy like a dark cloud.
Walmart is well positioned in this turbulent economy, as it’s still top of mind for value for money across categories, especially essentials like grocery. Robust retail ecosystems like Walmart’s will withstand economic pressures far better than smaller businesses.
Let’s also remember that in 2021 Walmart announced a $350 billion investment in U.S. manufacturing over 10 years, which will shorten the supply chain and boost resilience. Walmart is ready for this moment.
Much has been said about how and why Walmart can withstand widespread tariff increases, and the Brain Trust is correct—they can and will. I recall during the pandemic being on Walmart executive leadership calls, where my peers in supply chain received requests from CXOs of the world’s largest consumer goods companies seeking access to our (Walmart’s) freight and logistics services into the States. Today, Walmart is not only the world’s largest big-box retailer; it’s also a technology powerhouse, a logistics behemoth, and a data enterprise.Rather than viewing Walmart’s stance as a purely pragmatic outlook, it might be more insightful to consider the following two points: