Walmart Warns on Prices as ETF Holdings Show Mixed Flows

Walmart Inc. (WMT) shares climbed around 1.6% midday Friday despite warnings from the retail giant that consumers will soon face higher prices due to tariffs, according to the company's chief financial officer.

As America's largest retailer prepares to pass increased tariff costs to consumers, ETF investors holding Walmart exposure are seeing mixed signals, with several major funds experiencing large outflows despite positive returns, as investors have a cautious outlook on consumer resilience amid anticipated price increases.

CFO John David Rainey warned in a CNBC interview Thursday that price increases could begin "towards the tail end of this month, and then certainly much more in June." Rainey described the tariff situation as "unprecedented in terms of the speed and magnitude in which the price increases are coming."

Despite falling just short of quarterly sales estimates, Walmart beat earnings expectations and achieved a milestone by posting its first profitable quarter for its e-commerce business both in the U.S. and globally, according to CNBC. The company maintained its full-year forecast, projecting sales growth of 3% to 4%.

Impact on Consumer ETF Holdings

Walmart holds top positions in several major consumer-focused ETFs. 

XLP, FSTA, RTH & EGE Comparison—Source: FactSet data

Consumer Staples Select Sector SPDR Fund (XLP)

The Consumer Staples Select Sector SPDR Fund (XLP) has Walmart as its second-largest holding at 10%, behind only Costco Wholesale Corp. (COST) at 10.5% and ahead of Procter & Gamble Co. (PG) at 8.8%, according to FactSet data.

XLP, which tracks a market-cap-weighted index of consumer staples stocks from the S&P 500, has posted positive performance this year, with returns of 0.1% over one month, 1.2% over three months and 3.8% year to date. However, the fund has shed assets, with outflows of $228.3 million over the past month, $1.1 billion over three months and $895.4 million year to date.

Fidelity MSCI Consumer Staples Index ETF (FSTA)

Walmart's importance to consumer ETFs extends beyond XLP. The Fidelity MSCI Consumer Staples Index ETF (FSTA), which offers exposure across the entire market-cap spectrum of U.S. consumer staples companies, shows Walmart as its second-largest holding at 12.5%, outweighing Philip Morris International Inc. (PM) at 5.1% and PepsiCo, Inc. (PEP) at 4.1%.

FSTA has shown more resilient flows compared to XLP, with positive inflows of $35.7 million over the past month, $92.3 million over three months and $94.5 million year to date. Its performance has also been slightly stronger than XLP, with returns of 0.7% for one month, -0.1% over three months and 4.5% year to date.

VanEck Retail ETF (RTH)

The VanEck Retail ETF (RTH), which takes a more concentrated approach by tracking a market-cap-weighted index of the 25 largest US-listed companies deriving most revenue from retail, also features Walmart prominently. Within RTH, Walmart ranks as the second-largest position at 9.4%, behind Amazon.com, Inc. (AMZN) at 20.1% and Home Depot, Inc. (HD) at 7.4%, according to data from FactSet.

RTH has demonstrated the strongest recent performance among the Walmart-heavy funds, with a 5.5% gain over the past month and a decline of 2.4% over three months. Year to date, the fund is up 4.7%. Despite its strong performance, RTH has maintained modest positive fund flows, with inflows of $2.2 million over one month, $9.4 million over three months, and $14.1 million year to date.

ProShares Ultra Consumer Staples (UGE)

For investors seeking amplified exposure, the ProShares Ultra Consumer Staples (UGE) provides double the daily exposure to consumer staples stocks from the S&P 500, according to FactSet. This leveraged product includes Walmart as its fourth-largest holding at 7.4%. UGE has attracted $1.9 million in new assets over the past month despite dropping about 0.6% during the same period.