Walmart says tariff impact gradual, but changing customers' behavior
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Walmart released its quarterly earnings on Thursday, Aug. 21. Photo: David Paul Morris/Bloomberg via Getty Images
Walmart is feeling steady cost pressures from tariffs as it replenishes shelves with higher-priced goods — a squeeze that's beginning to shape customer behavior, CEO Doug McMillon said Thursday.
Why it matters: The impact of tariffs has been "gradual," McMillon said, but weekly costs are rising as inventory cycles through at post-tariff levels.
- He expects that pressure to persist into the third and fourth quarters.
What they're saying: "We aren't seeing dramatic shifts the way things have played out so far," McMillon said during an earnings call Thursday, noting that "any behavioral adjustments by the customer have been somewhat muted."
- "Not surprisingly, we see more adjustments in middle- and lower-income households than we do with higher income households," McMillon said.
- "With regard to our U.S. pricing decisions, given tariff-related cost pressures, we're doing what we said we would do," McMillon said. "We're keeping our prices as low as we can for as long as we can."
Flashback: McMillon and Walmart officials warned in May that the world's largest retailer couldn't hold the line anymore and would have to raise some prices,
- This led President Trump to demand Walmart "eat the tariffs."
State of play: Despite tariffs driving up prices in some areas, Walmart is also looking at lowering prices and growing value, a move other businesses are leaning into including Target, Kohl's and McDonald's.
- Walmart officials say they have more than 7,400 item "rollbacks," up 2,000 from the prior quarter, with a 30% increase in grocery rollbacks compared to the same quarter last year.
Between the lines: The retailer's fast delivery options are helping it gain more higher-income shoppers, officials said.
- "Approximately one-third of deliveries from store in recent weeks were fast delivery in 3 hours or less," Walmart CFO John David Rainey said Thursday, adding "20% of those deliveries arrived to our customers in 30 minutes or less."
What to watch: "We're expecting to have a good holiday season at Walmart," McMillon said, noting the back-to-school shopping season is usually an indicator of how the holidays will go.
Editor's note: This story was updated with additional information throughout.
