By
Bloomberg
Published
February 20, 2025
Walmart Inc. forecast lower-than-expected profit for the full year, signaling that even the world’s largest retailer isn’t immune to risks in the broader economic environment.
The company said it’s anticipating adjusted earnings to come between $2.50 to $2.60 per share, below the average of what Wall Street analysts were projecting. The stock fell 6.2% at 9:35 a.m. in New York on Thursday.
Bentonville, Arkansas-based Walmart historically has given conservative guidance, but investor expectations are high after a 77% run-up in the stock price over the past 12 months.
Raymond James analyst Bobby Griffin said that the company is taking a “conservative approach” to consumer trends and near-term investments, like the recent acquisition of the smart-TV maker Vizio Holding Corp. Long-term prospects haven’t changed despite the stock move, he wrote in a research note.
On a call with analysts, John David Rainey, the company’s chief financial officer, described its guidance as consistent with past years, but acknowledged “there are still uncertainties related to consumer behavior and global economic and geopolitical conditions.”
For the upcoming year, Walmart expects overall net sales growth in the range of 3% to 4%, which is lower than the 5% growth the company experienced in the last fiscal year.
Rainey said in an interview that the guidance doesn’t include the potential impact of tariffs given unpredictability around the levies. Walmart imports food from Mexico and general-merchandise products like microwaves from China.
“We’ll work with suppliers. We’ll lean into our private brands” to keep prices low, he said, adding that the company has operated with tariffs for several years.
The retailer, known for low prices, has benefitted in recent years from consumers prioritizing essentials like groceries following years of inflation. In the most recent quarter, the company said it saw growth in market share primarily from households earning more than $100,000 per year.
Walmart is the first big-box retailer to report quarterly figures after the important holiday season. Comparable sales, excluding fuel, rose 4.6% at US Walmart stores open at least a year for the quarter ended January 31, higher than what Wall Street analysts were expecting.
“I would describe the consumer as steady,” Rainey said, adding that spending is far from a complete rebound. General merchandise sales are improving, he said, and demand from the holiday season was in line with what the company expected.
Food prices rose in the low single digits during the latest quarter, while general merchandise items got cheaper. The company saw higher transaction counts and customers spent more per trip, on average. January recorded the strongest sales over the period, executives said on the call with analysts.
Still, Walmart and other retailers are facing a myriad of unknowns. Tariffs remain a big question mark for retail companies after President Trump temporarily paused them on products from Mexico and Canada and imposed additional levies on China. Many consumer companies have yet to incorporate the impact of tariffs into their guidance.
US retail sales dipped in January, with the weather – including fires in Southern California and winter freezes in various parts of the country – likely affecting spending. Meanwhile, core inflation picked up last month due to higher energy and food prices, according to government data. Eggs drove up food inflation, as the bird flu curtails supply.
Home Depot Inc., Target Corp. and others are set to post results in the coming weeks. Target raised its sales guidance for the fourth quarter following a better-than-expected holiday season. Shares of Target and Costco fell in early trading on Thursday after Walmart reported earnings.
Walmart tends to perform well during tougher economic periods. This time, the company has said its digital business is helping attract and retain more consumers, including higher-income shoppers drawn to the convenience of online pickup and delivery services. The retailer’s digital operation is also beefing up its assortment to include items like collectibles and pre-owned Chanel bags that aren’t available in stores.
