US retail giants raise prices and seek new import countries due to tariffs.

Four of the major retail groups in the United States, including the largest in the country and worldwide, Walmart , have highlighted in their respective second-quarter earnings presentations the complexities their businesses face due to the tariffs imposed by the Donald Trump administration . These have been the main topic of conversation for Walmart itself, Home Depot, Target, and Lowe's, listed retailers that are already feeling, to a greater or lesser extent, the effects of this trade policy.

In terms of results, the impacts have been cushioned by the swift reaction of companies, which have had to implement various price increases and activate the search for greater cost efficiencies. As Walmart President and CEO Doug McMillon acknowledged, "Our costs continue to increase each week, which we expect to continue through the third and fourth quarters." His counterpart at Target, Brian Cornell, echoed this sentiment: "The direct cost impact of the tariffs will be with us as long as the tariffs are with us."

The spotlight was on Walmart. The global retail giant had already warned, in its first-quarter earnings presentation, that it would not be able to absorb all the cost pressures stemming from the tariffs, due to the narrow margins with which the company and, in general, the entire sector operates. Even US President Donald Trump pressured the company to cover these costs against its margins.

“We're doing what we said we would do,” Doug McMillon explained this week. “We're keeping our prices as low as we can, as long as we can,” he added, reflecting the ongoing pressure on costs, which are constantly rising. “As we replenish inventory at post-tariff prices, we're seeing our costs continue to increase each week, which we expect to continue through the third and fourth quarters,” he added.

Margin protection

According to its financial information, Walmart has surgically adjusted its prices to maintain its margins. The group increased its revenue in the first half by 3.7%, compared to a 3.6% increase in its procurement costs, which has allowed it to resist and even gain a tenth of a percent of gross margin. The same can be seen in the second quarter alone: ​​sales improved by 4.75%, compared to a 4.7% decrease in the cost of sales.

“We're focused on the core business, both pricing and inventory management,” McMillan explained. Tariffs are also making a difference in this last area, inventory. In Walmart's case, the value of these increased by $2.1 billion in the first half of the year, 3.7% more than a year earlier, “due to higher import costs.”

The retail giant clarifies that the majority of its purchases are made in the US, while a third come from abroad, mainly from China, Mexico, Vietnam, India, and Canada. In the case of the Asian giant, it plans to threaten a tariff of 145%, up from the current 30%.

Diversifying import sources is now a concern for US retailers. "Our teams have done an impressive job in recent years diversifying our merchandise supply. We will continue to work with our suppliers to ensure we have the right products at the right price," Home Depot Executive Vice President Billy Bastek explained this week. He specified that 50% of its merchandise is not subject to tariffs because it is sourced in the US.

This company, the world's largest specialist in renovations, acknowledges that there will be "modest price movements in some categories" because current tariffs "are significantly higher than in May," Bastek explained. It also announced reduced promotional activity on some of its offerings.

Like Walmart, Home Depot has been very careful with its pricing, especially in the second quarter. During that period, its revenue grew 4.86%, driven by a 4.84% increase in procurement expenses, enough to bolster its margin.

Exposure to the foreign market

Two other of these large US operators are exposed to high levels of imports. Lowe's, also specializing in home improvement products, buys 60% of its products outside the US, and 20% from China. "Seven years ago, the percentages were much higher. We've done an excellent job of diversifying," said its president and CEO, Marvin R. Ellison, this week.

Like other retailers, Lowe's is also implementing price increases with a category-specific approach. "We said we would be competitive on price, and that's what we'll continue to do. Prices are dynamic, and they will go up and down depending on the category," said Ellison. The company increased sales by 1.6%, while its supplies increased by 1%. Yet another case of margin defense.

Target, for its part, acknowledges that, "as one of the country's largest importers, the prospect of higher tariffs means facing greater operational and financial hurdles," said its president and CEO, Brian Cornell, who will step down as CEO next year. The company's trajectory is complicated by "multiple changes in tariff policy as the year has progressed," he emphasized.

Therefore, the supermarket company has employed various mitigation strategies, including the "diversification" of production and supply countries. "We will adjust prices as a last resort," said its executive vice president, Rick Gomez, this week.

The company, one of the leaders in the traditional distribution business, has seen three consecutive years of declining sales, a trend that continued in the first half of the year. Sales declined by 1.9% in that period , improving to 0.9% in the second quarter. Its inventory increased by 2%, "reflecting higher product costs due to tariffs and other pressures."

Of the four companies analyzed, Target is the only one whose gross margin worsened in the second quarter. It did so by one percentage point, after increasing its merchandise costs by 0.5% and reducing sales by 0.9%. The company expects to complete its recovery by 2026.