Walmart raised its sales outlook for the year on Thursday, even though its tariff-related costs are rising.
The Arkansas-based retail giant said it projects net sales to grow between 3.75% to 4.75% for the fiscal year, an increase from previous estimates of 3% to 4%.
President and CEO Doug McMillon said the company and its customers have been nimble in navigating this year’s landscape, which was marked by President Trump’s decision to impose sweeping tariffs on imported goods.
“The impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted,” Mr. McMillon told investors on a second-quarter earnings call. “But as we replenish inventory at post-tariff price levels, we’ve continued to see our costs increase each week, which we expect will continue into the third and fourth quarters.”
He said lower and middle-income households are more likely to change their buying behavior due to tariffs than higher-income ones.
“We’re keeping our prices as low as we can, as long as we can,” Mr. McMillon said.
Mr. Trump’s trade policy is a major shift for retailers that source goods from overseas. The president is leaning heavily into tariffs, which are taxes on foreign goods brought into U.S. markets.
Companies can respond by moving more production to the U.S. or places with lower duties, absorbing the cost of the tariffs or boosting prices.
Walmart made headlines last spring, when it said tariff costs would force it to raise some prices. Mr. Trump reacted angrily, saying the retailer should “eat” the costs.
On Thursday, Chief Financial Officer John David Rainey told CNBC that Walmart has “fully absorbed” tariff costs for some products and “had to pass some of those costs along” for others.
Mr. Trump imposed a 10% blanket tariff on imports earlier this year, but his stiffest levies are starting to hit now.
The White House recently finalized tariffs ranging from 15% to 41% on more than 67 countries, raising levies to their highest levels in over a century.
Mr. Trump also solidified the 10% blanket tariff on all imports and is implementing the 15% rate he negotiated with the European Union, Japan and South Korea.
Companies are balancing their need to remain profitable with a reluctance to raise prices at the checkout counter, since they must compete for budget-conscious customers.
A top Walmart competitor, Target, said this week it is moving around supply chains to mitigate the impact of tariffs and would only raise prices as a “last resort.”
Other retailers outlined small price increases due to tariffs or estimated profit losses for the coming fiscal year due to the levies.