On Wednesday, Walmart executives showed that America’s biggest retailer is still trying to figure out the total impact of Trump’s tariffs.
At its investor day, Walmart warned of tariffs taking a toll on its profits after it walked back its first quarter operating profit growth guidance.
By Wednesday afternoon, President Trump shared in a social media post that he would authorize a 90-day pause on his reciprocal tariffs while keeping the 10% across-the-board duty.
China was the exception. The country now faces a 125% tariff because of “the lack of respect that China has shown,” Trump wrote.
Read more: What Trump’s tariffs mean for the economy and your wallet
The country is a significant sourcing region for Walmart and other retailers. Walmart is “entering this environment in a position of strength, which you can’t say for many other retailers,” CFRA analyst Arun Sundaram told Yahoo Finance.
Target does not have “as many levers as Walmart does,” Sundaram said. “Either Target raises prices more than Walmart, or they take a hit on margins.”
“You’re probably more likely going to see a hit on Targets’ margins because … they want to maintain competitive prices,” Sundaram added.
Walmart shares are essentially flat on the year, compared to the S&P 500’s 7% drop and Target’s 27% plunge. On Wednesday at market close, all three ended in the green as US stocks rallied following Trump’s announcement.
At close: April 9 at 4:00:02 PM EDT
Target has been trailing behind. Last quarter, its same-store sales increased 1.5%, compared to Walmart’s 4.6% growth. Gross profit margins dropped to 26.2% from 26.6% a year ago, which Telsey Advisory Group’s Joe Feldman alluded to “higher digital fulfillment and supply chain costs as well as elevated promotions and clearance rates, partly offset by the effective management of merchandising activities.”
Then, a major boycott in the US hit Target on Feb. 28 due to the walkback of its diversity, equity, and inclusion initiatives. Foot traffic has since been down for two months in a row.
Noah Rohr of Morningstar said Walmart has “so much financial capacity to basically withstand tariffs” due to its scale and product mix.
While Target is sizable at nearly 2,000 US stores, Walmart has more than 4,500 US stores and 10,750 locations globally. Target does not have an international business.
Walmart also sells more food. More than 60% of Walmart US sales are groceries, while 50% of Target’s sales are discretionary purchases, like apparel, electronics, and home furnishings — items that are getting hit the hardest in this trade war.
Conventional grocers, like Krogers (KR) and Albertson’s (ACI), also have been struggling with their own issues, including slower sales and new leadership at both.
“The smaller retailers are probably going to struggle getting market share,” Sundaram said. Walmart has enough profit to reinvest into keeping prices low, widening its price gap with competitors.
CEO Doug McMillon said the company will try to maintain its price gap in the face of tariffs: “If you had us choose between widening them or having them narrow, we’re not going to let them narrow.”
And Walmart has been winning market share, per a spring 2025 Piper Sandler consumer survey.
“The percent of parents who shop exclusively at Walmart increased from Fall 2024 across all income cohorts, while the percent of parents who shop exclusively at Target decreased across all income cohorts,” the report said.
Rohr, among other analysts Yahoo Finance spoke to, said the results of the tariff madness will likely be reflected in the second quarter or third quarter results, particularly during the summer months,
Walmart also has another buffer against tariffs: alternative revenue streams. It’s been growing its advertising business, Walmart Connect, membership program, Walmart+, and e-commerce offerings, like its third-party marketplace.
Executives at investor day said its e-commerce business will be profitable in the first quarter and on an annual basis by year-end.
“These high-margin business streams are helping grow profit margins,” Sundaram said. The company can also “reinvest some of the profits from these high-margin revenue streams into lowering prices for customers or increasing wages for their employees.”
CFO John David Rainey told attendees, “This is a milestone moment for our company, and we expect to see the benefits and margins into future years.”
Target also has its own ad and e-commerce offerings, though much smaller than Walmart’s. Its digital comparable sales grew by 8.7% last quarter, compared to Walmart’s 16% jump.
In the US, Walmart Connect revenue increased 24%. Target’s digital ad business Roundel grew just 13% year over year.
“As we’ve seen in times like this in the past, customers, when they’re looking for value, are going to come to Walmart … if you’re an advertiser, you want to follow the eyeballs,” Rainey said. “We stand pretty well positioned there.”
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.Click here for all of the latest retail stock news and events to better inform your investing strategy
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