Walmart China posts upbeat Q1 results

Shoppers browse fruit at a Sam's Club store, a membership-only chain under Walmart, in Suzhou, Jiangsu province, on Feb 8. (CHINA DAILY)

Walmart China's first-quarter results showcased a robust performance, with net sales reaching $6.7 billion, a year-on-year increase of 22.5 percent. The company reported 16.8 percent growth in comparable sales, driven in part by a 34 percent surge in its e-commerce segment.

The company's Sam's Club continues to show strong growth, bolstered by seven new locations over the past 12 months, including one which opened this quarter.

Currently, Walmart operates 334 stores in China, with Sam's Club accounting for 55 of these locations as of early May.

CFO John Rainey said during the earnings call on Thursday that international sales grew by 7.8 percent in constant currency, driven largely by strength in China. The membership income from Sam's Club China grew more than 40 percent, as member counts continue to increase, he said.

Walmart Inc President and CEO Doug McMillon said on Thursday that tariffs on China have had the "biggest impact" on costs as he announced that the world's largest retailer will likely raise prices later this month as a result.

"All of the tariffs create cost pressure for us, but the larger tariffs on China have the biggest impact. The cost pressure from all the tariff-impacted markets started in late April, and it accelerated in May," he said.

"We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure, given the reality of narrow retail margins," he said. "In retail, managing inventory is always important."

McMillon told analysts on the call that he hoped the tariffs would be reduced further. The CEO said that the company is reliant on merchandise imported from various countries, with China being a significant source for categories like electronics and toys.

While the United States and China reached a deal last weekend that lowered duties for imports on Chinese goods from 145 percent to 30 percent for 90 days, the number is still "too high", Rainey said on the call.

The US is Walmart's number one market for sourcing, with less than one-third of what the company sells in the US being imported. China, Mexico, Canada, Vietnam, and India are its largest markets, said the CFO.

"There are certain items, certain categories of merchandise that we're dependent upon to import from other countries, and prices of those things are likely going to go up, and that's not good for consumers," he said.