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Walmart CFO: Raised guidance for fiscal FY'20 factors in tariff impact

Walmart Inc.'s CFO and Executive Vice President Brett Biggs said the retailer's decision to raise its earnings outlook for fiscal 2020 factors in the impact of the most recently announced round of tariffs on Chinese imports.

"Our updated guidance reflects our current understanding of the timing of tariff implementation on various categories as [the most recent list of goods targeted] affects a larger part of our [product] assortment than the prior tariffs," Biggs said in an Aug.15 statement accompanying the retailer's second-quarter earnings report. Walmart's second-quarter EPS exceeded analysts' expectations.

As reported, the retailer now expects its fiscal 2020 adjusted EPS to come between a slight decrease and a slight increase compared with fiscal 2019, including the impact of its Flipkart India Private Ltd. acquisition. Previously, it had forecast its fiscal 2020 adjusted EPS to decline year on year within a low single-digit percentage range.

The U.S. trade representative said Aug. 13 that upcoming tariffs of 10% on certain Chinese imports have been postponed to Dec. 15, while others are still slated to go into effect Sept. 1. This most recent round of tariffs targets items including electronics, clothing, footwear and toys. Thus far, the U.S. has imposed a 25% tariff on $250 billion imports from China.

Biggs said Walmart raised its guidance because of improved profitability in the U.S. business during the first half of the year. Comparable sales in the U.S. grew 2.8%, while U.S. e-commerce sales rose 37% in the second quarter.

Walmart has "thoughtfully" managed its pricing and margins over the past months, Biggs said, and will continue mitigation strategies to keep prices low.

Walmart also addressed gun safety in its statement following two separate fatal shootings at its stores in El Paso, Texas, and South Haven, Miss. Walmart CEO and President Doug McMillon noted the actions the company has previously taken surrounding guns. These include stopping the sale of military-style rifles in 2015 and raising its age requirement for buying guns and ammunition from 18 to 21 in 2018.

McMillon said the company is encouraged by the "broad support" emerging to strengthen background checks and that an assault weapon ban should be debated. He noted that Walmart represents about 2% of the U.S. market for firearms and 20% of the ammunition market.

The CEO said the retailer is identifying additional measures to "strengthen our processes, improve our technology and create an even safer environment in our stores."

Walmart said Aug. 5 that it will not change its gun sales policy following the recent shootings.