In a trade war, Walmart does not have some of Amazon's ammunition

Copyright © HT Digital Streams Limit all rights reserved. Dan Gallagher, The Wall Street Journal 3 min Read May 17, 2025, 05:08 IST Walmart and Amazon are expected to amount to about $ 700 billion in revenue this year. Brandon Bell / Getty Images / AFP (Photo by Brandon Bell / Getty Images North America / Getty Images via AFP) (Getty Images via AFP) Summary of Walmart’s stock is more expensive, but Amazon’s growth and profit potential are much greater. Two US retail titans are on the front lines in President Trump’s trade war. It seems that investors bet that Walmart could avoid even more bullets than Amazon. Walmart used its fiscal report in the first quarter on Thursday to warn that its prices are rising as products covered by new rates begin to hit its shelves. This considered a strong report, with income rising almost 3% from the same period last year and operating earnings exceeding Wall Street’s forecasts. Wall Street doesn’t seem too worried. Walmart’s share sold sharply on Thursday morning, but recovered quickly. This has now risen almost 2% since the earnings of the past 12 months have set up about 53% – in front of other retailers and the Amazon’s 12% profit in the same period. It ended up-the home of ‘always low prices’-a fairly rich multiple of 37 times projected earnings for the next four quarters, which is 40% higher than the three-year average, according to Factset data. Amazon is now trading about 33 times in advance earnings. Such a premium leaves Walmart very little room for mistakes in a world where so much can go wrong. Walmart noted on Thursday that more than two-thirds of the goods he sells in US stores come from the US “but given the extent of the rates, even at the reduced levels announced this week, we cannot take up all the pressure, given the reality of the narrow retail margins,” said Doug McMillon, CEO of Walmart. ‘Narrow retail margins’ is also a challenge for Amazon. But the company has spent many years building supplementary and adjoining businesses such as woolly computing and advertising that offers much more financial firepower. It shows in the various income statements of the businesses. Amazon and Walmart ordered similar gross margins in the mid -20% series a little over a decade ago, according to data from S&P Global Market Intelligence. Walmart’s remained in that series, while Amazon’s annual gross margin almost doubled – which lasted 49% last year. Certainly, Walmart has done a commendable job to become more than just an enormous physical trader. E-commerce income hit at the end of the end of the end of the 22.5 billion dollars, by 22% higher than the same period last year and now 20% of the total sales of the company. This enabled Walmart to follow in Amazon’s footsteps and expand new revenue streams with higher margin of subscriber fees and advertising. Bernstein analyst Zhihan Ma says Walmart is on a “fundamentally improved” earnings lane in the long run. But Amazon is much further on that road. Note that although both companies are expected to amount to about $ 700 billion this year, Amazon’s operating income expects to be about 2½ times if those of Walmart’s at more than $ 77 billion for Amazon, according to factset estimates. And this is even after the cost of Amazon’s aggressive investments in artificial intelligence and the introduction of its own satellite network. These companies are also less linked to the overall retail environment than Walmart’s additional businesses such as advertising, making them a better hedging at tariff chaos. Walmart’s scope and execution gives it a clear advantage over other traditional retailers in an environment of rising prices and concerned consumers. But beating Amazon at his own game is still a way. Write to Dan Gallagher at [email protected], catch all the corporate news and updates on live currency. Download the Mint News app to get daily market updates and live business news. More Topics #amazon Mint Specials