Shoppers Have Been ‘More Resilient’ in the Face of U.S. Tariffs, Canadian Tire CEO Says
Canadian Tire Corp. Ltd. has seen a 9% spike in spending on essentials and a 1% rise in purchases of discretionary goods, the first increase in this area in three years. This resilience is reflected in “healthy” spending across all income levels, contributing to the company seeing an 8 percent spike in spending on essentials and a 1% rise in purchases of discretionary goods.
Greg Hicks, CEO of Canadian Tire, said that customers across the company’s banners—Canadian Tire, SportChek, Party City, Mark’s, and Pro Hockey Life—appear to be coping well with higher duties he had worried would weigh heavily on spending. He noted that even tariff-riddled auto manufacturing communities are showing “no clear signs of softness.”
The company’s resilience is also reflected in “healthy” spending across all income levels, contributing to the company seeing an 8 percent spike in spending on essentials and a 1 percent rise in purchases of discretionary goods—the first increase in this area in three years.
This rosier-than-expected outlook came as a surprise given his previous warning that the tariffs U.S. President Donald Trump was threatening could substantially erase signs of an economic rebound if they caused shoppers to cut back on purchases. Since then, Trump has made good on many of his threats, imposing tariffs on aluminum, steel, and some auto products crossing the Canada-U.S. border.
About 15% of the money Canadian Tire spends on acquiring or manufacturing products is tied to the U.S., and only a “manageable fraction of that is currently affected,” Hicks said. However, that situation could change because escalating tariffs lobbed between China and the U.S. are now “really starting to hit factories” in the Asian country, which produces a massive amount of the world’s goods.
To cope with global trade attacks, Canadian Tire has a “tariff task force” that has been seeking alternatives to U.S. goods, negotiating with vendors, and managing margins to blunt the risk of price inflation for customers.
Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Canadian Tire
Home Depot Tops Quarterly Sales Estimates on Stable Demand, Says It Has No Plans for Price Hikes
Home Depot has announced that it will keep prices unchanged despite U.S. tariffs, which may make some products unavailable at the home-improvement chain. The company intends to maintain pricing across its portfolio, but this means some products could disappear from shelves. Home Depot is less exposed to China than Walmart and sources less than half of its goods outside North America. CEO Ted Decker told investors that within the next 12 months, no single country outside the U.S. will represent more than 10% of its purchases.
Net sales for the quarter ending May 4 came in at $39.86 billion, compared with estimates of $39.31 billion. It logged an adjusted profit per share of $3.56, missing expectations of $3.60. The company might be able to lean on suppliers to bear the brunt of tariffs, but if they are committing to passing none of the incremental impact on to end consumers, they will have to absorb the remaining tariff costs internally, which would hit margins.
The company’s operating margin dipped to 12.9% for the quarter, down from 13.9% for the year-ago period. Recent slowness in home improvement retail, often viewed as a bellwether for economic health, has observers watching Home Depot closely for signs of a downturn. The retailer is in its “Super Bowl season,” referring to the spring and summer months when people tend to lawns, gardens, and DIY home projects.
Budget constraints continue to weigh on larger home renovation activities, which Decker acknowledged on Tuesday could be a result of macroeconomic fears. On paper, conditions seem good for big projects: unemployment is low, inflation is trending down, and housing turnover is stubbornly low. However, there is still enough macro uncertainty to discourage big projects.
Home Depot’s acquisition of SRS Distribution last year has boosted its ability to capture spending from the professional customer base, including contractors. Analysts expect widening price gaps vs. smaller competitors ahead.
Source: Globe and Mail
Source: Financial Post
Source: Home Depot
Lowe’s Tops Quarterly Sales Estimates on Strong Professional Demand
Lowe’s reported a smaller-than-expected drop in first-quarter sales and said it plans to keep its pricing competitive, without ruling out the possibility of price hikes on some items due to tariffs. CEO Marvin Ellison said Lowe’s is “not donating shares to any competitor by sitting back and not being price competitive.” In contrast, competitor Home Depot vowed to keep prices steady, but the companies maintained their annual forecasts. Lowe’s CFO Brandon Sink said he expects profit margins to remain flat this fiscal year, noting that price impacts from tariffs would be concentrated in the second half of the year due to the company’s practice of selling older stock first.
Prices are a key topic in retail in the wake of U.S. President Donald Trump’s imposition of big tariffs on key trading partners. The levies could even rise further in the coming months. Walmart last week warned that shoppers could soon face higher prices due to the U.S. tariffs, while Target lowered its annual sales and profit forecasts on Wednesday, citing weakening demand among shoppers.
Home Depot, Lowe’s primary rival, bet on its diversified supply chain and a strong hold on professional customers like contractors to mitigate tariff impact. However, company executives admitted that if tariffs on certain items became untenable, they could disappear from shelves altogether. Lowe’s has also diversified its supply chain and added more local suppliers to help it mitigate the impact from U.S. tariffs.
The company expects 2025 comparable sales to be flat to 1% higher and earnings per share in the range of $12.15 to $12.40.
Source: Globe and Mail
Source: Lowe’s
Source: Lowe’s
Walmart Reports First Quarter Results
Walmart Inc. reported a steady growth in revenue and operating income for the first quarter of 2025, with a 2.5% increase in constant currency. The company also reported a 2.2% increase in global eCommerce sales.
Walmart U.S. comparable sales increased 4.5%, with strong growth in health & wellness and grocery. The company issued guidance for Q2 with net sales expected to increase 3.5% to 4.5% in constant currency.
The company’s outlook for fiscal year 2026 remains unchanged from prior guidance. The company delivered a solid first quarter in a dynamic operating environment, with strong growth in customer service and membership income. The company is well-positioned, maintaining flexibility to navigate the near-term while continuing to invest to create value for the long-term.
Operating income increased by $0.3 billion, or 4.3%, adjusted up 3.0% due to higher gross margins and growth in membership income. The company also benefited from improved economics in eCommerce. Adjusted EPS 1 of $0.61 excludes the effect, net of tax, of a net loss of $0.05 on equity and other investments. ROA at 7.5%; ROI 1 at 15.3%, up 30 bps.
Source: Walmart
Walmart Warns of Higher Prices as Trump Tariffs Start to Bite
Walmart, the largest retailer in the US, has been warning customers that prices will rise for goods ranging from bananas to car seats due to tariffs ordered by US President Donald Trump. The company is doing everything in its power to absorb the higher costs from tariffs, which are the highest since the 1930s. However, given the magnitude of the duties, higher prices are unavoidable and will hurt Walmart customers already buffeted by inflation over the past three years.
Trump’s threatened 145-percent import taxes on Chinese goods were reduced to 30% in a deal announced Monday, with some of the higher tariffs on pause for 90 days. Higher prices began appearing on Walmart shelves in late April and accelerated in May, but a larger sting will be felt in June and July when the back-to-school shopping season goes into high gear. Walmart executives said that they are wired to keep prices low, but there’s a limit to what they can bear, or any retailer for that matter.
Higher prices arrive as many Americans pull back on spending as they grow increasingly uneasy about the economy. Government data revealed slowing sales growth for retailers, and Walmart says that its consumers have become cautious and selective. Tariffs on China and other countries are threatening the low-price model at the core of Walmart’s success. Retailers and importers had largely halted shipments of shoes, clothes, toys, and other items owing to new tariffs, but many are resuming imports from China in the narrow window that opened during the temporary “truce” this week, hoping to avoid sparse shelves this fall. Yet retailers, already operating on thin margins, say they have no choice but to raise prices to offset higher costs from tariffs.
Walmart is also asking suppliers to swap input materials for components if possible, such as using fibreglass instead of aluminum, which Mr. Trump hit with tariffs in early March. He said there are some goods for which Walmart simply cannot shift production or produce easily in the United States.
Source: Globe and Mail
Source: Financial Post
Source: CNBC
Source: Walmart
Costco Tops Earnings and Revenue Estimates as Sales Jump 8%
Costco reported an 8 percent year-over-year sales gain and higher earnings per share in its fiscal third quarter compared to Wall Street expectations. The company’s leaders said on an earnings call that tariffs have brought higher costs and other challenges, forcing Costco to tweak its supply chain and, in some cases, raise prices.
Costco’s net income for the three-month period ending May 11 rose to $1.90 billion, or $4.28 per share, compared with $1.68 billion, or $3.78 a year earlier. Revenue rose from $58.52 billion in the year-ago period. Comparable sales, an industry metric that takes out one-time factors such as store openings and closures, rose 8%, and e-commerce sales rose nearly 16% compared with the year-ago period, excluding gas and the impact of changes to foreign exchange.
As tariffs raise economic worries and potentially consumer prices, Costco could stand to benefit. Unpredictable tariff policy could help drive more customers to the warehouse club, which is known for its competitive prices and bulk discounts, and encourage them to renew membership. Its clubs also sell discounted gas and groceries, which are steadier traffic drivers even when consumers pull back on spending.
Costco also has a stronger hand in price negotiations with suppliers because of its large size. About a third of Costco’s U.S. sales are goods brought in from other countries, and items imported from China represent about 8% of total US sales.
Some retailers have already warned that higher tariffs will mean higher prices. On the company’s earnings call, CEO Ron Vachris said Costco has looked for ways to reduce tariff costs while keeping prices low. He said its buyers rushed orders to get them to the U.S. ahead of tariffs. Costco has rerouted goods from countries with higher tariffs to non-U.S. markets and sourced more items for its private brand, Kirkland Signature, in the countries or regions where the items are sold.
Source: Yahoo Finance
Source: CNBC
Source: Costco
