Walmart warns it may have to raise prices due to fuel costs

Higher-than-planned fuel costs in global distribution and fulfillment operations are increasing pressure on Walmart’s customers and supply chain. Rising fuel prices are already affecting household budgets, with average gallons purchased at Walmart gas stations falling below 10 for the first time since 2022. Walmart+ members are using fuel savings benefits more frequently, saving 10 cents per gallon at participating stations. The closure of the Strait of Hormuz and elevated fuel costs are creating real impacts to cost of goods sold for Walmart and its suppliers. If elevated costs persist, Walmart expects somewhat higher retail price inflation in Q2 and the second half of the year, with food costs influenced by fertilizer supply and production dependencies. Walmart’s revenue and operating income continue to grow, supported by membership, advertising, and e-commerce growth.

"Consumers may face higher retail prices in the coming months due to higher-than-planned fuel costs in global distribution and fulfillment operations and the rising cost of food manufacturing, CFO John David Rainey warned on a call with investors Thursday morning."

"One example of how customers are already responding to the higher fuel prices is that the average number of gallons customers filled up with at the company's gas stations fell below 10 for the first time since 2022, according to Rainey. "That's an indication of stress," he said."

"The effects of higher fuel prices and the Strait of Hormuz closure represent "real impacts to cost of goods sold for us and our suppliers," Rainey said. "If the current elevated cost environment persists, we expect somewhat higher retail price inflation in Q2 and the second half of the year.""

"Rainey said the food category, for example, is heavily dependent on fertilizer, which he said is made with nitrogen and phosphates that are heavily dependent on the Strait of Hormuz. Still, Rainey said the company's fast-growing membership and advertising revenue insulate it from macroeconomic factors."

Read at Digiday