Walmart’s operating profit sank from a year earlier as rising supply costs outstripped sales growth amid President Trump’s ongoing trade war with China.
Prices the company paid for merchandise sold in its stores surged 2.5% to $97.9 billion in the three months through July, the company said Thursday, while total revenue increased just 1.8%.
Like other retailers, the Bentonville, Arkansas, is grappling with an uncertain expense outlook as tensions escalate between the White House and Beijing. Trump announced at the start of the month he would slap 10% tariffs on $300 billion in Chinese goods, effectively targeting all products from China not covered by previous duties of 25% on $250 billion in merchandise.
This week, the administration decided to delay some of the duties, including on apparel, toys, and electronics, until mid-December in an effort to minimize harm to U.S. consumers during the busy holiday shopping season.
“We’re continuing to monitor the ongoing tariff discussions and are hopeful that an overarching long-term agreement can be reached,” said Brett Biggs, Walmart’s chief financial officer.
The company has worked to shield its shoppers from the impact of the tariffs as much as possible, and it “continues to execute appropriate mitigation strategies as our goal is to be the low-price leader,” he said. “Over the past several months, the team has been able to thoughtfully manage pricing and margins with both our customers and shareholders in mind.”
Sales at stores open at least a year climbed 2.8% in the quarter, the retail giant reported, while its e-commerce sales rose 37%. Walmart boasted a total revenue of $130.4 billion, a $2.3 billion jump from the same period last year.
The company is “gaining market share” in areas like food, consumables, health and wellness, and toys, and is projected to best its original earnings expectations for the year, CEO Doug McMillon said.
Separately, Walmart continues to grapple with the aftermath of a mass shooting at an El Paso, Texas, store in which 22 people were killed and 24 were injured.
Days earlier, a disgruntled Walmart employee in Mississippi was arrested in the shooting deaths of two other associates.
“We are focused on the safety of our associates and customers in all our stores and clubs,” McMillon said Thursday. “Those tragic and painful events will be with us forever, and our hearts go out to the families that were impacted.”
In the wake of the massacre, Walmart has been pressured by employees, celebrities, and gun control activists to end gun and ammunition sales, and McMillon provided additional details Thursday on the company’s share of the business.
Walmart, he said, makes up roughly 2% of the nation’s firearms market and sells about 20% of the country’s ammunition. Its firearm sales place it “outside at least the top three sellers in the industry,” McMillon said.
The Walmart CEO reiterated steps the retailer has already taken on firearms, including halting the sale of handguns and military-style rifles and raising the minimum purchasing age to 21 last year.
McMillon didn’t indicate any forthcoming changes to Walmart’s firearm policies but said the company is “encouraged that broad support is emerging to strengthen background checks and to remove weapons from those who have been determined to pose an imminent danger.”
The company urged debate over reauthorization of the assault weapons ban, which many Democrats are advocating, and said the country “must also do more to understand the root causes that lead to this type of violent behavior.”
