Raphael Stevens

Cava beat Wall Street’s estimates for its fiscal first-quarter revenue as its same-store sales climbed 10.8%.
Other restaurant companies have reported same-store sales declines and falling traffic as consumers have pulled back their restaurant spending.
Still, Cava reiterated its same-store sales forecast for the fiscal year, sticking with its projections of a 6% to 8% increase.

A customer exits a Cava restaurant in New York City on June 22, 2023.
Brendan McDermid | Reuters

Cava on Thursday reported better-than-expected sales in its latest fiscal quarter, shaking off the malaise the broader restaurant industry has felt as consumers have cut back on dining.
The Mediterranean chain said its same-store sales grew 10.8% in the three months that ended April 20, lifted by traffic growth of 7.5%. Analysts surveyed by StreetAccount were projecting same-store sales growth of 10.3%.

“When we look at our consumers in the quarter, we saw an increase in premium attachment on higher priced items, like our pita chips or amazing housemade juices. We also saw that our per person average continued to increase, and then when we look at our results, there’s positive traffic across all of our geographies, across all of our income cohorts, as well as the different formats of our restaurants and dayparts,” Chief Financial Officer Tricia Tolivar told CNBC.
She added that diners have been trading up from fast food and down from casual-dining restaurants into Cava’s bowls and pitas, a trend the company has seen for several quarters.
Elsewhere in the restaurant industry, companies have been reporting very different behavior from consumers, although many companies’ results did not include any time in April, when the industry’s sales and traffic performance improved.
Fast-casual rival Chipotle said its transactions fell 2.3% in the first quarter as consumers pulled back their spending in February, spooked by economic uncertainty. Sweetgreen reported its first quarterly same-store sales decline since it went public in 2021. McDonald’s CEO Chris Kempczinski said fast-food industry data showed both low- and middle-income consumers spending less. The burger giant said U.S. same-store sales declined 3.6% for the first quarter.
Despite the strong quarterly performance, Cava reiterated its same-store sales forecast, sticking with its projections of a 6% to 8% increase. The chain said last quarter that it is expecting slower growth in the back half of its fiscal 2025.

The stock fell 5% in extended trading. As of Thursday’s close, Cava shares have slid 11% so far this year, hurt by investor concerns over its conservative outlook for the fiscal year and the economic fallout from the Trump administration’s tariffs.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 22 cents. That may not compare with the 14 cents per share expected by LSEG.
Revenue: $332 million vs. $327 million expected

The company reported fiscal first-quarter net income of $25.71 million, or 22 cents per share, up from $13.99 million, or 12 cents per share, a year earlier. Cava reported an income tax benefit of $10.7 million related to stock-based compensation, which boosted its earnings this quarter.
Net sales climbed 28% to $332 million. On a 12-month trailing basis, Cava’s revenue has surpassed $1 billion, representing a major milestone for the company.
The company did raise some of its projections for the fiscal year.
Cava now anticipates adjusted earnings before interest, taxes, depreciation and amortization of $152 million to $159 million, up from its prior forecast of $150 million to $157 million. The company also plans to open between 64 and 68 new locations, higher than its previous outlook of between 62 and 66 restaurant openings.

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Walmart on Thursday said even the discounter will have to raise prices on some items because of tariffs.
Bananas, roses, avocados and toys are some the items hit by higher tariffs, according to the company.
Chief Financial Officer John David Rainey said shoppers will likely start to see increases toward the end of May and more in June.

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025. 
Frederic J. Brown | Afp | Getty Images

Price increases are coming soon to a Walmart near you.
On Thursday, Walmart CFO John David Rainey warned investors that even the retail giant known for its discounts will have to raise the prices of many items because of tariffs — despite a 90-day reprieve that lowered duties on Chinese imports to 30%. Goods from dozens of other countries face a 10% duty.

“We’re trying to navigate this the best that we can,” he said in a CNBC interview. “But this is a little bit unprecedented in terms of the speed and magnitude in which the price increases are coming.”
He said the company is committed to keeping prices low relative to competitors and will absorb some of the higher tariff costs, but said shoppers will likely see increases toward the end of May and more in June. And he predicted more markups than usual in the fiscal second quarter, which began earlier this month.
As the largest retailer and grocer in the U.S., Walmart offered insight into what shoppers may have to pay more for, and when, at a range of stores and chains around the country. The company on Thursday gave clues about which specific items and departments would be most affected by tariffs.
About a third of what Walmart sells in the U.S. is made, grown or assembled in the country, but it relies on goods brought in from dozens of other nations, especially China, Mexico, Vietnam, India and Canada, CEO Doug McMillon said on the company’s earnings call.
He said tariffs on countries like Costa Rica, Peru and Colombia have put pressure on the price of imported items, including bananas, avocados, coffee and roses. He added that a high volume of merchandise in some categories like toys and electronics comes from China.

McMillon did not specify how much more Walmart customers could ultimately have to pay for those items— and how much of the duties will be absorbed by the company or its vendors.
Yet McMillon said the realities of higher costs began to hit Walmart in April, as it imported items including merchandise for the back-to-school season. Tariffs are paid when items come through customs, so some imports have already been subject to higher duties of 145% or the now lower 30% level, even if tariffs ultimately fall to a lower rate.
“What we’re looking at is upward pressure began in April and placed through the entire year on things that are imported,” he said.
Some brands that Walmart sells have spoken about price increases. Barbie maker Mattel’s CEO Ynon Kreiz, for example, told CNBC early this month that it would raise prices on some toys in the U.S., but that was prior to the announcement Monday to temporarily reduce the duty on China.
Another brand that Walmart sells, Microsoft, said it increased the recommended selling price for Xbox video game consoles and some controllers.
Walmart also shed light on how retailers and consumer brands are trying to manage inventory and keep their businesses on target as tariff levels swing dramatically. Just days ago, Walmart and other retailers faced a 145% levy on imports from China before the temporary agreement.
Retailers and consumers have contended with trying to guess if and when higher prices will hit. That’s led to early purchases of some big-ticket items, such as cars, but also fueled consumers’ hesitance to spend in other areas. At the same time, companies are trying to predict consumer demand while placing orders for the critical back-to-school and holiday shopping seasons.
McMillon said Walmart has taken other steps to reduce tariff exposure along with price increases. Suppliers have shifted from materials like aluminum, which faces tariffs, to fiberglass. Merchants have gotten creative by switching to other products or places to source merchandise.
Rainey told CNBC that Walmart has cut the size of some orders for items where it expects to have bigger tariff-related price increases, since that will likely cause fewer customers to buy those products.
Yet for Walmart, tariffs haven’t dampened sales expectations for the year — and ironically, could help drive shoppers to its stores and website. The company stuck by its full-year forecast on Thursday, despite just missing Wall Street’s quarterly revenue expectations.
In a CNBC interview with Courtney Reagan on “Squawk on the Street,” Rainey said that consumers seek value when prices are higher, and that could give Walmart a chance to gain market share. He echoed comments that the company made at an investor day in April, when it told analysts that the retailer would keep price gaps with competitors the same — even if that means giving up some profit margin.
“There might be some areas where we want to play offense, where we want to be more aggressive,” Rainey said. “We might absorb some of that impact in short term for the benefit long term.”
Correction: This story has been updated to correct the spelling of Colombia.

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Dick’s Sporting Goods plans to acquire Foot Locker for $2.4 billion.
Foot Locker has been undertaking an ambitious turnaround, but its weak stock price has made it a takeover target.
The combined company will have a major competitive edge in the Nike sneaker market and will provide Dick’s access to international markets, plus a younger and urban consumer.

Foot Locker and Dick’s Sporting Good stores.

Dick’s Sporting Goods said Thursday it plans to acquire rival Foot Locker as it looks to expand its international presence, win over a new set of consumers and corner the Nike sneaker market. 
Under the terms of the agreement, Dick’s will use a combination of cash on hand and new debt to acquire Foot Locker for $2.4 billion. Foot Locker shareholders can receive either $24 in cash – a roughly 66% premium of Foot Locker’s average share price over the last 60 days – or 0.1168 shares of Dick’s stock.

Foot Locker CEO Mary Dillon has been undertaking an ambitious turnaround at the footwear retailer, and while there have been signs of improvement, larger market conditions like tariffs and consumer softness have weighed on the company’s stock, making Foot Locker a potential takeover target. As of Wednesday’s close, Foot Locker shares were down 41% this year. 
In a joint press release, Dillon said the acquisition is a “testament” to all of the work her and her team have done to improve the business.
“By joining forces with DICK’S, Foot Locker will be even better positioned to expand sneaker culture, elevate the omnichannel experience for our customers and brand partners, and enhance our position in the industry,” said Dillon.
The CEO added she was “confident this transaction represents the best path for our shareholders and other stakeholders.”
While the companies are longtime rivals — both competing to sell the same brands in their stores — Dick’s is almost double the size of Foot Locker in terms of revenue. In their most recent fiscal years, Dick’s reported $13.44 billion in revenue, while Foot Locker saw $7.99 billion.

Dick’s said it expects to operate Foot Locker as a stand-alone business unit within its portfolio and maintain the company’s brands – Foot Locker Kids, WSS, Champs and atmos. 
Dick’s CEO Lauren Hobart said on a conference call Thursday that the two businesses will be run as separate entities and the consumer “may or may not know that Dick’s and Foot Locker are one.”
“The combination of them for the consumer is not the most important thing, it’s making sure that there’s two powerful brands that are meeting all consumer needs, wherever, whenever, however they want to shop,” Hobart said.
The merger brings together two iconic names in sports retailing and will give Dick’s a massive competitive edge in the wholesale sneaker market, most importantly for Nike products.
Currently, Nike’s primary wholesale partners are Dick’s, Foot Locker and JD Sports. If the merger is approved, the combined company would be able to corner the Nike market at a time when the sneaker giant is more reliant on wholesalers than in years past. 
“Dick’s Sporting Goods and Foot Locker are two of the most storied and respected brands in our industry and have been our valued partners for decades,” said Nike CEO Elliott Hill in a statement. “Each has their own loyal consumer following and deep understanding of the needs of athletes. I am confident that together, they will help elevate sport and continue to accelerate the growth of our industry.”
The acquisition will also allow Dick’s to enter the international markets for the first time, as Foot Locker operates 2,400 retail stores in 20 countries, and gives it access to the type of consumer who doesn’t usually shop at its stores. The Dick’s customer tends to be affluent, suburban and older, while the Foot Locker customer is urban, younger and more likely to be lower and middle income. That latter customer has long underpinned sneaker culture and is critical for Dick’s to reach long-term growth and competitive advantage. 
While Hobart said the company is not looking toward international expansion at this time, the total addressable market that Dick’s is operating in will grow from $140 billion to $300 billion due to Foot Locker’s global reach.
The proposed combination raises considerable anti-competition concerns, but Wall Street expects President Donald Trump’s Federal Trade Commission to be more favorable to mergers.
Hobart said during the call that the companies are “not expecting any regulatory concerns” with the FTC.
Foot Locker shares soared more than 80% after the deal was announced Thursday. Shares of Dick’s fell roughly 15% as investors worried about the impact the merger could have on financial results.
While Dick’s expects the transaction to be accretive to earnings in the first full fiscal year post-close, and to deliver between $100 million and $125 million in cost synergies, Foot Locker has been struggling for some time. It has a cumbersome store footprint, many of which are in malls, and it’s more exposed to economic downturns because of the lower-income level of its customer.  
Foot Locker has assessed all of its stores and determined that some locations could close, Hobart said, but she does not expect a “significant” number of stores to shutter.
In a note on Thursday, TD Cowen called the deal a “strategic mistake” as it downgraded shares of Dick’s to hold from buy. Analyst John Kernan said the transaction is “likely to produce low returns” and presents clear risks to synergies, integration and the structural foundation of Foot Locker’s business. Kernan expects the return on capital to be low and said it raises balance sheet risks.
“There is little to no precedence of M&A at scale creating value for shareholders within Softlines Retail. In our view, there are countless examples of M&A destroying billions of dollars in value since we have covered the sector,” said Kernan.
Dick’s Executive Chairman Ed Stack said the company knew there would be some initial skepticism in response to the merger, but stressed that the two companies are “highly confident” and “up for the job.”
“We’re pretty conservative. We don’t have a lot of big egos here,” he said. “If we didn’t see this clear line of sight to this, or we thought that this was going to impact what we’re able to do with Dick’s, we wouldn’t be doing it.”
Both companies preannounced fiscal first-quarter results after announcing the merger. Foot Locker reported comparable sales down 2.6% from the prior-year period, led by a slowdown internationally, and expects to see a net loss of $363 million for the period, compared with net income of $8 million in the year-ago period. That loss includes $276 million in charges related primarily to trademark and goodwill impairments.  
Meanwhile, Dick’s said it saw comparable sales growth of 4.5% and earnings per share of $3.24.
“We are very pleased with our strong start to the year and our demonstrated sustained growth,” said Hobart. “The strength of our business puts us in a great position for our proposed acquisition of Foot Locker — a transformative step to accelerate our global reach and drive significant value for our athletes, teammates, partners and shareholders.”

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Bombas co-founder David Heath is stepping down as CEO to become executive chair, and retail veteran and former Under Armour executive Jason LaRose will take the helm.
The socks and apparel company, which has grown more than 20% so far this fiscal year, is looking to expand beyond direct-to-consumer and reach more customers through wholesale channels.
Bombas, which rose to fame after appearing on “Shark Tank” in 2014, is profitable and has reached more than $2 billion in lifetime sales.

Bombas Socks in store.
Courtesy: Bombas

Bombas founder David Heath is stepping down from his role as CEO as the socks and apparel company looks to expand beyond its direct-to-consumer roots.
Bombas President Jason LaRose, a former Under Armour and Equinox executive, will take over as the company’s next CEO effective Thursday. Heath said he realized it was necessary for a retail veteran to lead the company through its next phase of growth.

“We’ve reached a size and scale that is beyond my expertise. I didn’t come from a big apparel company before … I found myself more so over the last 18 months saying, ‘I don’t know what to do next,'” Heath, who is staying at Bombas as its executive chair, told CNBC in an interview. “So then, when I looked at someone with Jason’s background … having that tried and true experience is what will set Bombas up to succeed for the next chapter and I think I feel more comfortable having someone with Jason’s experience in the driver’s seat.” 
LaRose, who spent six years at Under Armour and oversaw its North America business, takes the helm at a critical point in Bombas’ growth story. 
Bombas’ revenue has grown 22% in its current fiscal year through April, it’s reached more than $2 billion in lifetime sales and its EBITDA is at a “super healthy, double digit” margin, LaRose told CNBC. The company’s footwear segment, such as its ultra-popular Sunday Slipper, is expanding the fastest. The company expects footwear revenue will soar more than 70% this year, but socks are still growing steadily, with sales up 17% in April compared to the prior year. 
But in order to reach its goal of growing from a “Shark Tank” startup into a multibillion dollar company over the next five-to-10 years, Bombas needs to expand its wholesale presence. Retailers that primarily sell online like Bombas tend to reach a growth ceiling and need to turn to other channels to keep scaling profitably.
Under LaRose’s direction, Bombas is looking to grow its wholesale revenue from around 7% of sales to between 10% and 20%. The company also wants to test out physical stores. 

“More than 60% of socks in this country are sold in physical locations, you know, whether that’s stores we could open, or stores that we fill with our partners … the wholesale opportunity is big for us,” said LaRose. “It’s also a billboard for us, right? It’s a chance to tell our story. When the customer walks by, we have a chance to tell them about the mission every time, why we’re here, let them touch and feel the product, which is always important when you’re introducing somebody to a new apparel brand.” 

Jason LaRose, CEO of Bombas
Courtesy: Bombas

Bombas currently sells in Nordstrom, Scheels and Dick’s Sporting Goods, and unlike some of its peers, it isn’t considering Amazon as a wholesale channel. Instead, it’s looking to expand its assortment offered by its current partners, try out its own stores and perhaps bring on some new wholesalers – if they’re the right fit. 
Digitally native brands that have long enjoyed the benefits of a direct model, such as customer data and the ability to stay close to customers, are often wary about expanding too deeply into wholesale because it’s less profitable and it’s harder for brands to tell their stories. For a company like Bombas, which spent years developing what it calls the “most comfortable socks, underwear, and T-shirts” on the market, that storytelling is extremely important – especially at a price point of around $15 per pair of socks. 
However, it’s that very attitude that has led some to criticize the direct selling model because of how it can stymie growth and lead to unsustainable business models. Many of the early direct-to-consumer darlings have seen their valuations shrivel up as they chase profitability years after they were founded.  E-commerce has become harder to do profitably, and at a certain point, stores and wholesale are a more effective and profitable customer acquisition tool for some companies than marketing online. Selling goods through wholesale channels allows brands to scale and acquire customers more profitably than just selling online.

Bombas Socks in store.
Courtesy: Bombas

Brands like Bombas that were early to move to wholesale – Heath joked that the company “focused on profitability before it was cool” – understand the need for expansion but have looked to be strategic about who they partner with. Growth is important, but so is maintaining a brand, which is critical to staying ahead of rivals. 
“As a DTC brand, we care so much about our brand and our story, it has to be somebody who’s going to do an excellent job taking care of our brand. We’re not out there to be out there,” said LaRose. “We’re looking at some other partners. We’ll continue to always look for people who we think strategically give us access to the right customer, you know, nothing to announce yet on that front, but we’ll keep looking.” 
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.” More

More than 40% of the nation’s 100 largest metropolitan markets are struggling with a lack of affordable housing.
Home sales in the lower and middle price tiers continue to underperform the high-end market.
A new report from the National Association of Realtors and Realtor.com breaks down affordability and supply, shedding light on exactly where the pain points are in the market.

In an aerial view, single family homes neighbor open space on April 18, 2025 in Thousand Oaks, California.
Kevin Carter | Getty Images

Ever since the epic run on housing in the first years of the pandemic, fueled by record-low mortgage rates, the market has been plagued by low supply and high prices.
Prices in March were 39% higher nationally than they were in March 2019, pre-pandemic, according to the S&P CoreLogic Case-Shiller Index. While prices continue to gain, the supply crunch is finally starting to ease — but not at the right price points.

Demand for housing is strong overall, but strongest on the lower, more-affordable end of the market. That segment is still desperately undersupplied. As a result, home sales in the lower and middle price tiers continue to underperform the high-end market.
A new report from the National Association of Realtors and Realtor.com breaks down affordability and supply, shedding light on exactly where the pain points are in the market. Affordability was determined by using standard underwriting guidelines for buyers using a 30-year fixed mortgage, where 30% of income is used for the monthly payment (mortgage, property tax and insurance).
For those earning between $75,000 and $100,000 annually, considered middle- to upper-middle-income buyers, the supply of homes for sale that they could afford increased the most of any income group this year from a year ago. In March 2024, 20.8% of listings were within reach for these households, and by March of this year that rose to 21.2%. But in March 2019, those same buyers could afford nearly half, or 48.8%, of all active listings.
In a so-called balanced market between buyer and seller, that group should be able to afford 48% of all listings, according to the report. Based on current inventory levels, the market would need roughly 416,000 more listings priced at or below $255,000 in order to be balanced, the study found.
For those earning below $75,000 annually, the market has become even less supplied. A homebuyer with a salary of $50,000 could afford just 8.7% of available listings in March, compared with 9.4% in March 2024 and 27.8% in March 2019.

Higher-income households have near-total access to the housing market. Homebuyers earning $250,000 or more can afford at least 80% of home listings.
“Shoppers see more homes for sale today than one year ago, and encouragingly, many of these homes have been added at moderate-income price points,” said Danielle Hale, chief economist at Realtor.com. “But as this report shows, we still don’t have an abundance of homes that are affordable to low- and moderate-income households.”
Hale added that progress in inventory hasn’t been uniform across the country, saying gains have been concentrated in the Midwest and the South.
While the report is a national snapshot, all real estate is local.
Markets in the Midwest, like Akron, Ohio; St. Louis; and Pittsburgh, are considered balanced, with enough supply to meet demand. Others have made significant strides, adding more affordable listings but still shy of meeting demand. These include Raleigh, North Carolina; Des Moines, Iowa; and Grand Rapids, Michigan.
More than 40% of the nation’s 100 largest metropolitan markets, however, are still struggling. These include Seattle and Washington, D.C. While the supply of affordable homes has increased in both markets, households still need to earn more than $150,000 a year in order to afford even half of the homes available.
Other markets that had been overheated are finally cooling off. Austin, Texas; San Francisco; and Denver have seen a substantial increase in the supply of affordable homes. They now surpass pre-pandemic levels.
“It tells us that with the right mix of new construction, market shifts, and local policy efforts, even some of the most challenging markets can start to bend toward balance,” according to the report’s authors.
And then there are markets that are just getting worse. Many of these are in Southern California, including Los Angeles and San Diego. New York City also falls into that category. The report cites several factors for this, including decades of underbuilding, a limited supply of buildable land, high construction costs, restrictive zoning laws and fast in-migration.
Homebuilders are trying to put up more affordable homes, but their costs are high and could go even higher amid tariffs and new immigration policies. Single-family housing starts in March were nearly 10% lower than the same month a year prior.

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Walmart beat first-quarter earnings estimates but fell just short of sales expectations.
Chief Financial Officer John David Rainey said consumers could start to see higher prices as soon as later this month.
The company said its e-commerce business was profitable for the first time during the quarter.

Walmart on Thursday fell just short of quarterly sales estimates, as even the world’s largest retailer said it would feel the pinch of higher tariffs. 
Even so, the Arkansas-based discounter beat quarterly earnings expectations and stuck by its full-year forecast, which calls for sales to grow 3% to 4% and adjusted earnings of $2.50 to $2.60 per share for the fiscal year. That cautious profit outlook had disappointed Wall Street in February, but the company’s shares rose slightly on Thursday in premarket trading.

Walmart also marked a milestone: It posted its first profitable quarter for its e-commerce business both in the U.S. and globally. The business has benefited from the growth of higher-margin moneymakers, including online advertising and Walmart’s third-party marketplace. 
In an interview with CNBC, Chief Financial Officer John David Rainey said tariffs are “still too high” – even with the recently announced agreement to lower duties on imports from China to 30% for 90 days. 
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” he said. “It’s more than any supplier can absorb. And so I’m concerned that consumer is going to start seeing higher prices. You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June.”
Walmart said it expects net sales to increase 3.5% to 4.5% for the fiscal second quarter, but declined to provide guidance for earnings per share or operating income growth because of fluctuating U.S. tariff policy.
Here is what the big-box retailer reported for the three-month period that ended May 2 compared with Wall Street’s estimates, according to a survey of analysts by LSEG:

Earnings per share: 61 cents, adjusted vs. 58 cents expected
Revenue: $165.61 billion vs. $165.84 billion expected

In the fiscal first quarter, Walmart’s net income fell to $4.49 billion, or 56 cents per share, compared with $5.10 billion, or 63 cents per share, in the year-ago quarter.
Revenue rose about 2.5% from $161.51 billion in the year-ago period, but had a 1% headwind from lapping leap day in the year-ago period. Yet it marked Walmart’s first quarterly revenue miss since February 2020.
Comparable sales – an industry metric also known as same-store sales – jumped 4.5% for Walmart U.S. and 6.7% for Sam’s Club, excluding fuel.
E-commerce sales increased 21% in the U.S., marking the 12th straight quarter of double-digit gains. Global e-commerce sales jumped 22% year over year.
Walmart is often seen as a barometer for the health of the U.S. consumer because of its thousands of stores and large customer base that cuts across age, income and region. Rainey told CNBC that Walmart has not seen a noticeable shift in consumer behavior from previous quarters.
“They’re discerning. They’re mindful. They’re maybe a little concerned about possible looming price increases, but their behaviors largely have not changed. They’re still looking for value,” he said.
Sales in the quarter were “a little choppy,” Rainey said. He said results in February fell below the company’s expectations, March results came in closer to what Walmart expected and then April “was a lot stronger.” So far, he said May “feels a lot more like April” with sales patterns.
Average ticket, or the amount that a customer spent, rose 2.8% year over year. Customer transactions increased 1.6% compared with the year-ago period in the U.S. Yet despite the growth of purchases across Walmart’s store and website, that marked the fourth straight quarter of deceleration for the metric.
Trade remains a major wild card for the company — and the retail industry — as companies debate how much inventory to order and place bets about where tariff levels will ultimately land. About a third of what Walmart sells in the U.S. comes from other parts of the world, with China, Mexico, Canada, Vietnam and India representing its largest markets for imports, Rainey said on the company’s earnings call Thursday.
CEO Doug McMillon said on the company’s earnings call that tariffs on China, in particular, create the greatest cost pressure. He said imports from the country account for high volume in categories such as toys and electronics.
He said Walmart is focused on keeping food prices low, but said tariffs on countries like Costa Rica, Peru and Colombia have put pressure on the prices of bananas, avocados, coffee and roses. In some cases, he said, it’s keeping prices where they are — even if that means absorbing higher costs — such as keeping the price consistent for flowers at Sam’s Club on Mother’s Day.
In an interview with CNBC on Thursday, Rainey said the company is working with vendors to try to keep prices down. But, he added “this is a little bit unprecedented in terms of the speed and magnitude in which the price increases are coming.”
Still, he said, Walmart plans to “play offense” by keeping its price gaps below competitors. He said the company will absorb some of the higher prices from tariffs and expects suppliers will, too.
He said Walmart has not canceled any orders, but has reduced the size of some purchases. For example, he said, it is buying less of items that it anticipates may sell less because of a higher tariff-related price.
Walmart’s quarterly report kicks off a wave of sales updates from major retailers. Target, Home Depot and Lowe’s are all scheduled to report quarterly earnings next week, as investors and economists gauge the strength of the U.S. consumer and the impact of higher tariffs on the retail industry.
Unlike some of its peers, Walmart has advantages that have helped it better weather an uncertain economy and woo a more selective U.S. consumer. As the nation’s largest grocer, it sells food and necessities that drive steadier store and website traffic. And as a well-known value player, it can use lower prices to attract even middle- and upper-income customers who want to pay less. Already, Walmart has attracted wealthier shoppers with faster deliveries, store remodels and a wider assortment of brands.
Plus, the discounter has grown profits faster than sales by looking beyond retail to newer business, including advertising and its subscription-based membership program Walmart+. Sales for its U.S. advertising business, Walmart Connect, increased 31% year over year in the first quarter, excluding the Vizio smart TV business that it acquired last year.
As of Wednesday’s close, Walmart shares are up about 7% so far this year. That outpaces the roughly flat performance of the S&P 500 during the same time period. Shares of Walmart closed at $96.83 on Wednesday, bringing the company’s market value to about $775 billion.
— CNBC’s Robert Hum contributed to this report. More