Higher tariffs on goods imported from China will force Walmart Inc. to raise prices for customers, the retailer's CFO and Executive VP Brett Biggs warned.
"We will do everything we can to keep prices low, but increased tariffs lead to increased prices," Biggs told Bloomberg News in an interview on May 16. "It's very item- and category-specific. There are some places where as we get tariffs, we will take prices up."
Separately, Biggs made comments regarding tariffs in a statement accompanying the retailer's 2020 first-quarter earnings, which beat expectations. Biggs said the company is monitoring the trade dispute and will continue to implement strategies to mitigate the effect from potential additional tariffs. He said the company is hopeful that an agreement will be reached.
"Our goal is to always be the low-price leader, and we will actively manage pricing and margins as warranted with our customers and shareholders in mind," Biggs said in the statement.
Biggs' comments on potential price hikes come a day after department store operator Macy's Inc. CEO and Chairman Jeffrey Gennette warned that additional tariffs could force the retailer to increase its prices.
Biggs told Bloomberg that the company's merchants are considering a number of different actions to counterbalance the effects of tariffs, including the possibility of finding different manufacturers.
The U.S. increased tariffs on $250 billion worth of Chinese imports to 25% from 10%, following trade negotiations that did not result in a deal. The increased tariffs went into effect on May 10. On May 14, the U.S. Trade Representative Office released a list of additional Chinese imports worth $300 billion that the U.S. plans to hit with 25% tariffs.
Biggs said in the company statement that Walmart is in a "good position" to meet its full-year expectations but the retailer anticipates sales in the second quarter will be negatively impacted by approximately $1 billion more than it expected at the top of the year due to exchange rates.
He did not provide Walmart's specific targets for fiscal 2020 in his statement. The retailer also did not include fiscal 2020 guidance in its first-quarter earnings release on May 16.
Walmart's most recent fiscal 2020 guidance came on Feb. 19, when it released earnings for the fourth quarter of fiscal 2019. At the time, Walmart said it expects adjusted EPS for fiscal full-year 2020 to drop by a low single-digit percentage rate from fiscal 2019. E-commerce net sales in the U.S. were projected to grow about 35%, while comparable sales in the U.S. were expected to increase between 2.5% and 3%, excluding fuel. Walmart's international net sales growth were projected to be about 5% in constant currency.
Biggs said in the statement that the retailer will provide an update on its full-year 2020 outlook in its second-quarter earnings report expected to be released on Aug. 15.