BENTONVILLE, ARK. — Top executives at Walmart said cost pressure from tariffs will force the retail giant to raise prices despite its efforts to lessen the impact on US consumers.

The trade update came as Walmart posted solid top-line growth, including strong US comparable-sales gains, but decreased net income for its fiscal 2026 first quarter. Still, the Bentonville-based company topped Wall Street’s forecast for adjusted earnings per share.

“We’ll keep driving growth, and we’ll control what we can control,” Doug McMillon, president and chief executive officer, told analysts in a May 15 conference call. “We continue to be confident in our ability to strengthen this business even as we navigate cost-of-goods changes. Our short- and longer-term opportunities are clear, and we’re positioned to manage the cost pressure from tariffs as well or better than anyone. But even at the reduced levels, the higher tariffs will result in higher prices.”

McMillon said Walmart began feeling the tariff bite last month. He noted that the Trump administration’s bigger levies on China represent the company’s chief concern on the tariff front. This week, the United States and China agreed to a 90-day pause of previously announced tariffs, in which the United States enacted a minimum 145% levy on imports from China, while China planned a 125% tariff on imports from the United States. Also, during the 90-day period, the United States agreed to cut tariffs on China to 30%, and China agreed to reduce its tariffs on US goods to 10%.

Currently, all imports to the United States are subject to a 10% baseline tariff, and 25% tariffs are in place on certain products from Canada and Mexico.

“All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact,” McMillon said. “The cost pressure from all the tariff-impacted markets started in late April, and it accelerated in May.”

Walmart will take pains to hold the line on food prices as it navigates tariffs, McMillon said.

“We want to keep our food and consumables prices as low as we can,” McMillon said. “Food prices in the US have gone up in recent years, and our customers have been feeling that all along. We won’t let tariff-related cost pressure on some general merchandise items put pressure on food prices. But as it relates to food, tariffs on countries like Costa Rica, Peru and Colombia are pressuring imported items like bananas, avocados, coffee and roses. We’ll do our best to control what we can control in order to keep food prices as low as possible. An example would be controlling the amount of fresh food waste. In some cases, we’re holding our retails (prices) where they are, despite the tariff cost pressure.”

On the general merchandise side, Walmart has more exposure to tariffs but also more flexibility to mitigate their impact, McMillon noted. More than two-thirds of the products that Walmart sells domestically are made, assembled or grown in the United States, he said. Other large sourcing markets for Walmart include China, Mexico, Vietnam, India and Canada, with China accounting for hefty volume in various categories, such as electronics and toys.

“When it comes to the general merchandise categories that are impacted, we’ll move production where that’s possible,” McMillon said. “That isn’t easy or fast, but we’ve been working on that for years. So it’s not like we’ve just started to make adjustments. In some cases, we’ll absorb costs within a category or department and not simply pass on a tariff cost attributable to each item individually. We’ll be managing mix across items, categories and businesses.

“We also have suppliers shifting materials from tariff-impacted components like aluminum to fiberglass, where there is no tariff. Our merchants, sourcing team and suppliers are being creative. It’s been impressive to watch our team identify opportunities and adjust. As we continue to diversify our profit streams through our ecommerce offering, our (online) Marketplace and membership, and advertising, we have some room to absorb costs.”

Inventory management also will be critical, McMillon said.

“In retail, managing inventory is always important,” he said. “In this situation, it’s even more important and even more challenging. It’s helpful that we’re entering the second quarter with well-managed inventory.”

Tariff situation ‘highly fluid’

John Rainey, chief financial officer at Walmart, emphasized to analysts that the state of affairs around tariffs holds a high degree of uncertainty.

“This is a highly fluid situation, and we’ll need to manage quantity decisions as we measure the price elasticity of impacted items,” he said. “I’m grateful that we have a team of experienced merchants, various levers we can pull and the tools available to manage this in a thoughtful and proactive way.”

For now, Walmart is taking a more positive view about how the tariff situation will shake out, he said.

“We’re not fully immune from the financial impacts in the short term,” he said. “We’ve done work internally to model various scenarios related to the ongoing trade policy discussions. These scenarios involve making assumptions about how long tariffs persist at certain levels versus coming down to some lower level once bilateral trade deals are completed. We also must make assumptions about the elasticity of demand as well as the overall macro backdrop in this environment. Perhaps it’s obvious, but worth stating: The range of possible outcomes is much greater than when we originally provided our annual guidance.

“That said, in what we believe are the most likely scenarios that we’ve modeled, we still have the ability to achieve our full-year guidance for both sales and operating income. These scenarios involve the belief that trade policy discussions will result in bilateral agreements, agreements in principle or the existence of good-faith discussions moving toward agreements that could result in tariff levels lower than those initially proposed in early April.”

If trade talks don’t pan out and dramatically higher tariff levels are restored, the impact to Walmart’s financials “could be significant and even jeopardize our ability to grow earnings year over year,” Rainey noted.

“In any case, we’re comfortable with our ability to grow sales in the range we’ve guided for the year,” he said. “While the swings from quarter to quarter could be large, we still think we can achieve our operating income guidance for the year. Should more progress on trade in the next several weeks be favorable, there could be upside. If elevated tariffs remain in place for an elongated period, there would be downside risk. We will know a lot more in a couple months.”

McMillon was sanguine about the US-China negotiations.

“I want to thank President Trump and (US Treasury) Secretary Bessent for the progress made recently,” he said in the call. “We’re hopeful that it leads to a longer-term agreement between the US and China that would result in even lower tariffs. We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure, given the reality of narrow retail margins.”

Full-year guidance upheld

For the first quarter ended April 30, Walmart’s net income totaled $4.49 billion, equal to 56¢ per share on the common stock, down from $5.1 billion, or 63¢ per share, a year earlier. Excluding a 5¢ net loss on equity and other investments, adjusted EPS was 61¢, up from 60¢ a year ago. Analysts, on average, had projected adjusted EPS of 58¢ for the quarter.

At the top line, consolidated revenue rose 2.5% year over year to $163.98 billion from $161.51 billion and was up 4% in constant currency. Walmart said 22% growth in global e-commerce sales gave a lift to results, which faced a 100-basis-point headwind from lapping leap day. Operating income climbed 4.3% to $7.14 billion and was up 6.8% in constant currency (up 3% adjusted).

“Our April results were better than we had expected, particularly in Walmart US,” Rainey said.

Walmart US net sales for the quarter came in at $112.16 billion, up 3.2% from a year ago and boosted by 21% e-commerce sales growth. Comparable sales excluding fuel advanced 4.5%, as customer transactions edged up 1.6% and the average ticket size grew 2.8%. Walmart said e-commerce contributed 350 basis points to US comp-sales growth. Operating income increased 7% to $5.7 billion (up 4.4% adjusted).

“Momentum in grocery sales continued with a mid-single-digit comp and ongoing share gains,” Rainey said, adding that Walmart remains focused on value and managing its price position.

“In Walmart US, we have more than 5,000 price rollbacks across our assortment,” he said, “and we’ve seen private brand sales outperform, with grocery private brand penetration up 60 basis points versus last year.”

Despite the fluid tariff situation, Walmart maintained its fiscal 2026 guidance. The company projects adjusted EPS of $2.50 to $2.60, net sales growth of 3% to 4%, and adjusted operating income growth of 3.5% to 5.5%.

McMillon said Walmart’s “immediate challenge is obviously navigating the impact of tariffs here in the US” but noted later in the call that “there isn’t anything about this quarter or anything about this coming year that shakes our confidence about growing profit faster than sales over the term of our long-range plan.”