00:00We've mentioned Walmart a few times, so let's get to it.
00:02Reporting a solid first quarter, but withholding income guidance for the current quarter.
00:06The retail giant warning price increases are on the way due to trade uncertainty.
00:10Joe Foudman of Towsie Advisory Group has an outperformed rating on the stock with a price target of 115.
00:16Joe joins us now for more.
00:17Joe, that stock is up this morning by 1.9% in the pre-market.
00:20Just your initial thoughts off the back of these numbers we got 36 minutes ago.
00:25Yeah, so I thought that the quarterly report was very good.
00:28It was a little better than expected in terms of sales and on earnings.
00:32And they maintained their guide for the full year, another thing that we were anticipating them to do.
00:37Now, the second quarter guide, sales came out better than expected, at least the constant currency guidance, 3.5% to 4.5% sales growth.
00:44That's definitely pretty solid.
00:45So they're still seeing the top line.
00:47They gave or didn't give guidance on operating profit.
00:51They said, you know, there's a wide range of outcomes, which I think we're going to hear a lot from others as they report.
00:56And it's not surprising in this environment.
00:59I mean, tariffs are creating a lot of uncertainty and causing retailers to need to take price increases, which, you know, Walmart is going to be one of them doing that as well.
01:09Joe, how surprised were you that they indicated that they could be raising prices as soon as this month, that they really cannot simply absorb the prices in their margins?
01:17How surprised were you that that was the message, given some of their previous messaging, that they wanted to compete on price?
01:25Well, I think Walmart is still going to be the lowest price retailer out there, even if they do raise price.
01:30In a sense, Walmart gives everybody else an umbrella to kind of raise prices up a little bit higher as well for themselves, because usually people try to compete with whatever Walmart's price is.
01:40Now, it is a little bit sooner than we anticipated.
01:43We thought maybe it would have been more June, July, where we would have seen that.
01:48But, you know, we are kind of mid-May at this point, so we're sort of there.
01:51And it makes sense.
01:52You know, at the moment, there's a 30 percent tariff on everything that comes in from China, 10 percent on the rest of the world.
01:58Prices are going up.
01:59Walmart can spread it around better than most because of all the different units that they do sell.
02:04And they have a very broad portfolio of goods, so you don't have to necessarily raise the price of the item that goes up by 30 percent on the tariff.
02:12You could spread that to other places.
02:14Plus, they have buying power, negotiating leverage.
02:17They're working with their supply chain and their vendors to be able to, you know, accommodate and take on some of that price increase as well related to the tariff.
02:26But very clearly, tariffs are causing a price increase on the consumer.
Be the first to comment