Walmart Stock Tumbles: CEO Warns Tariffs Are Raising Costs

Core Viewpoint - Walmart, Inc. reported its first earnings miss in three years, leading to a decline in stock prices, influenced by CEO Doug McMillon's warnings about the negative impact of tariffs on the company's financial performance [1][2]. Financial Performance - Walmart's stock was down 5.02% at $97.42 following the earnings report [5]. - The company has experienced a continuous increase in costs, which is expected to persist into the third and fourth quarters [2]. Consumer Behavior - While overall consumer spending has not significantly changed, some middle and lower-income families have reduced purchases of discretionary items that have seen price increases due to tariffs [3]. Cost Management - Walmart has managed to absorb most of the increased costs, passing only 4% to 5% of these expenses onto consumers, which has been crucial for maintaining competitive pricing [3]. Supply Chain Strategy - The company has successfully diversified its supply chain, shifting 30% of its China-sourced items to countries like Vietnam, Mexico, and India, which has helped mitigate the impact of tariffs [4]. - Despite these efforts, Walmart anticipates an increase in tariff-related costs in the second half of the year [4]. Pricing Strategy - McMillon emphasized the company's commitment to keeping prices low for as long as possible despite tariff-related cost pressures [4].