When Walmart (WMT) posted first-quarter results that beat estimates, it issued a warning that consumers should not ignore. Customers may still experience higher prices even though the White House reduced tariffs.
On the conference call, Walmart’s Chief Financial Officer said, “The magnitude of these increases is more than any retailer can absorb.” No supplier may absorb the tariffs. As a result, the CFO expects prices to increase toward the tail end of May. In June, prices will increase even more.
In Q1, Walmart earned $0.61 a share (non-GAAP). Revenue increased by 2.5% Y/Y to $165.6 billion. Its global eCommerce segment reported a healthy 22% increase in sales. It benefited from store-filled pickup, delivery, and marketplace.
Walmart is the juggernaut of the retail sector. It offers curbside pickup, which increases revenue per customer visit. Families are buying items in bulk, shopping online, and then picking up the goods. Customers save money while Walmart enjoys higher profitability.
WMT stock trades at a premium of 40 times price-to-earnings. Still, its P/E multiple will shrink as earnings grow. Investors should consider Costco (COST) and TJX Companies. Conversely, Target (TGT) is less appealing due to its lower product and customer diversification.
Ross Stores (ROST), Lululemon (LULU), and Gap (GAP) are the other retail firms to follow alongside Walmart.