Walmart to Mitigate List 4 Tariffs Via  ‘Negotiation,' 'Managing Mix,’ Says CMO

Walmart Chief Merchandising Officer Steve Bratspies is “really proud” of how his team mitigated the cost impact of the Lists 1, 2 and 3 Section 301 tariffs on Chinese goods, he told a Barclays investor conference Wednesday. List 4, which covers virtually all Chinese-sourced goods not previously tariffed, “makes it tougher” to manage, “there's no doubt about that,” said Bratspies. With the previous three tariff rounds, “there were a few prices” that Walmart had to raise, “but we didn't see any change in our unit projection of where we thought it would be, so that was absorbed,” he said. “We were very focused and targeted on how we did it. We didn't let any of our price gaps slip and we maintained price leadership.” Though List 4 “gets tougher” to do that, Walmart plans “the same approach that we took to List 3, which is we literally go through item by item,” said Bratspies. “That's what our buyers do.” There's “a whole bunch of different levers that a buyer can pull to understand how to manage that,” he said. The goal is to “offset as much as we possibly can either through negotiation" with vendors or by "managing mix,” he said. Even if the company needs to raise prices as a “last resort” to maintain margins, “we're going to run the Walmart model, which is we want to lead on price,” he said. The retailer slightly scaled back full-year expectations on consolidated net sales growth last month, factoring in the impact of the List 4 tariffs when they were still at 10 percent (see 1908150005).