Walmart could hike prices as higher fuel costs start to bite: Report
Arkansas, May 22
,: US retail giant Walmart signalled that it could hike prices in order to compensate for the impact of higher fuel costs, according to an NBC report.
US retailers are grappling with higher gasoline prices as the shockwaves emanating from the Iran war keep the energy markets on edge.
The big-box retailer reported positive first-quarter earnings with revenue rising 7.3% to $177.8 billion. Same-store sales grew 4.1%, in-line with estimates. The retail giant witnessed gains in its e-commerce business and among higher-income shoppers. However, higher fuel prices took a toll on the bottom line with the company saying it absorbed $175 million in higher-than-planned fuel costs over the quarter, NBC reported.
"These are real impacts to cost of goods sold for us and our suppliers," the NBC report quoted Walmart's chief financial officer, John David Rainey, who spoke to Wall Street analysts on a call.
"If the current elevated cost environment persists, we'd expect somewhat higher retail price inflation in Q2 and the second half of the year," he added.
The retailer's shares plunged 7%, taking its valuation below the trillion-dollar mark. Its outlook disappointed Wall Street as the retail behemoth said that higher gasoline prices will dampen consumer sentiment.
Higher-income shoppers continue to spend money at the stores with confidence, while the lower-income earners navigate headwinds, Rainey said. Consumers are cutting back on spending in light of worries around higher fuel prices eating into their household budgets.
In what is a clear indication of consumer stress, Rainey pointed to the drop in average fill-up at Walmart's fuel stations, which fell below 10 gallons for the first time since 2022.
Higher fuel prices pushed consumer prices up nearly 4% in April, outpacing wage growth for the first time since 2023.
Tax refunds helped alleviate some of the pain caused by higher energy prices, but that may not be the case now, Rainey told CNBC in an interview.
The Iran war and the continued closure of Strait of Hormuz are posing one of the biggest challenges to the global energy market. The IEA recently said that the energy markets could enter the "red zone" by July and August as supplies dwindle. The latest round of peace talks was clouded by uncertainty as Iran struck a stubborn stand on keeping the enriched uranium within the country.
— ANI
Reader Comments
It's a global cascading effect - Iran war closure of Strait of Hormuz is disturbing supply chains everywhere. For Indian consumers, we might see imported goods getting pricier too. Not just Walmart.
Tax refunds helped but they'll run out soon! Lower-income earners are the hardest hit - reminds me of our own struggles with inflation here. But good to see Walmart being transparent about it instead of hiding costs. 😊
Respectfully, this is classic corporate behaviour - they'll pass costs to consumers but won't cut CEO salaries. Meanwhile, the real issue is geopolitical tensions causing these fuel spikes. Peace talks need to be more constructive than stubborn posturing.
Interesting that higher-income shoppers are still spending confidently. Classic wealth inequality - the rich are insulated while the average person feels the pinch. I hope Indian policymakers are watching this as a warning for our own economy.
वाह! Average fill-up below 10 gallons for first time since 2022 - that's a massive indicator of consumer stress! Yahan bhi log petrol kam bharwa rahe hain. The world is really feeling the heat of this conflict. 🛢️
R Richard U