WALMART shoppers have been told to brace for major change in the coming weeks as top exec admits he is ‘concerned’.
All shoppers will be impacted, chief financial officer John David Rainey warned, in the wake of Thursday’s earnings call.
Despite best efforts to protect shoppers, Rainey admitted in an interview with CNBC that the problem has grown too large for the retailer to deal with on its own.
It comes after President Donald Trump‘s tariff war that has been a huge blow to the already struggling industry.
Even after a breakthrough agreement between the US and China over slashing tariffs by 115% for 90 days was signed on Monday, the taxes are “still too high”, Rainey said.
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” he told CNBC.
“It’s more than any supplier can absorb.
“And so I’m concerned that consumer is going to start seeing higher prices.”
“You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June,” he added.
Working with vendors to keep prices low for customers but “this is a little bit unprecedented in terms of the speed and magnitude in which the price increases are coming.”
Still, he said, Walmart plans to “play offense” by keeping its price gaps below competitors and will take on some of the higher prices.
The retailer hopes it’s suppliers will too.
Rainey added that Walmart’s customers are becoming increasingly “mindful” of cost changes and are “a little concerned about possible looming price increases”.
Their priority is “looking for value” when they visit the store which is something that Rainey promises Walmart will continue to provide despite current economic struggles.
His comments came after Walmart’s CEO Doug McMillon gave shoppers a blunt eight-word warning about continued price hikes throughout the summer.
But he was quick to also offer a message of hope to reassure Walmart’s loyal customers about the retailer’s commitment to their needs.
Walmart CEO's comments on the impact of tariffs:
“The higher tariffs will result in higher prices.
“We want to keep food prices and consumable prices as low as we can.
“Food prices in the US have gone up in recent years, and our customers have been feeling that all along.
“We’ll do our best to control what we can control in order to keep food prices as low as possible.
“We’re positioned to manage the cost pressure from tariffs as well as or better than anyone, but even at reduced levels, the higher tariffs will result in higher prices.”
However, a former Walmart CEO blasted the retailer for its comments, claiming that it in fact, could absorb the additional costs from the tariffs.
Bill Simon who was at the helm from 2010 to 2014 called out current Walmart chiefs in his own interview with CNBC after the retailer reported a strong first quarter.
“If you look down deep and dig into the details of their earnings release today, you know this quarter they grew their gross profit margin in the US business 25 basis points,” he said.
“So, they’re expanding their margin. They also reported their general merchandise categories were flattish because they had mid-single digit price deflation.
“That sort of gives them room in my view to manage any tariff impact that they would have.”
But it is not only Walmart that has been dishing out tough news to customers with other major players in the industry like Target and Best Buy issuing warnings about price hikes.
AFPWalmart is not the only retailer announcing sharp price hikes for the summer (stock)[/caption] Read More Details
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