ANNE D'INNOCENZIO
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NEW YORK (AP) — Walmart, which became the nation's largest retailer by making low prices a priority, has found itself in a place it's rarely been: Warning customers that prices will rise for goods ranging from bananas to car seats.
Executives at the $750 billion company told industry analysts Thursday that they're doing everything in their power to absorb the higher costs from tariffs ordered by President Donald Trump.
Given the magnitude of the duties, however, the highest since the 1930s, higher prices are unavoidable, and they will hurt Walmart customers already buffeted by inflation over the past three years.
Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced Monday, with some of the higher tariffs on pause for 90 days.
Those higher prices began to appear on Walmart shelves in late April and accelerated this month, Walmart executives said Thursday. However, a larger sting will start to be felt in June and July when the back-to-school shopping season goes into high gear.
“We're wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey told The Associated Press on Thursday after the company reported strong first-quarter sales.
Rainey emphasized that prices are rising not just for discretionary items such as patio furniture and trendy fashions, but for basic necessities as well. The price of bananas, imported from Costa Rica, rose from 50 cents per pound, to 54 cents. He thinks car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100. Baby strollers are also sourced from China, Rainey said.
Higher prices arrive as many Americans pull back on spending as they grow increasingly uneasy about the economy. A slew of companies including toy manufacturer Mattel, toolmaker Stanley Black & Decker and consumer products giant Procter & Gamble have announced higher prices or plans to raise prices.
But Walmart's moves are even more significant given its outsized power in the retailing landscape. Walmart says that 90% of American households rely on the retailer for a range of products, and more than 150 million customers shop on its website or in its stores every week. Analysts will dissect the earnings reports from other retailers including Target and Home Depot, set to be released next week.
Government data Thursday revealed slowing sales growth for retailers. Walmart says that its consumers have become cautious and selective.
