NEW YORK — Walmart has once again reported impressive sales and profits, attracting consumers who are feeling the pinch of inflation due to its competitive pricing. However, there are growing concerns regarding the American consumer’s financial health and how potential tariff changes might affect future performance as we look ahead to 2025.
The largest retailer in the United States shared a financial outlook that has shaken the retail industry, indicating that its projected earnings per share for the upcoming year could fall up to 27 cents short of what analysts had anticipated. This news caused Walmart’s stock to drop by more than 6% during midday trading, a significant decline for the company.
Additionally, Walmart’s sales forecast has taken a more conservative tone, possibly reflecting forthcoming challenges as shoppers appear to be reducing their expenditures. The implications of President Trump’s tariffs on imports from China and other nations pose a threat to Walmart’s business model, which relies heavily on low pricing strategies.
In a recent interview, Walmart’s Chief Financial Officer, John David Rainey, acknowledged that while customers are still showing resilience, they are also being careful with their spending. Rainey noted that there hasn’t been much change in shopping habits due to tariffs but did express concern about the unknown factors affecting the economy.
Rahe emphasized that Walmart has yet to account for potential tariffs in its financial projections, but he conceded that the impact of such tariffs cannot be ignored. “Our commitment remains to work diligently to maintain low prices for our customers,” Rainey stated, highlighting Walmart’s strategy to adapt sourcing practices. For instance, the company is pursuing alternative sources for products like microwave ovens due to rising tariffs on raw materials such as aluminum and steel, although some price hikes may still occur.
The discussion of tariffs has stirred apprehension and has reportedly led to some decreases in consumer spending in Walmart’s business in Mexico, according to Rainey. As a safeguard, Walmart has put measures in place against some tariff-related risks, sourcing about two-thirds of its merchandise domestically, with groceries comprising a significant portion of that—approximately 60% of its U.S. operations.
Despite this, shares in Walmart were negatively affected, and other major retailers also saw declines. As one of the first primary retailers to disclose its financial results, Walmart’s performance can provide insights into consumer sentiment in the U.S. Over the past year, American shoppers have increasingly prioritized necessities over larger purchases like televisions, furniture, or appliances, becoming more selective due to rising costs associated with borrowing and grocery prices.
Walmart has benefitted from this shift, notably increasing its market share among households earning over $100,000 annually. The expansion of its online offerings and the paid membership program known as Walmart+ have also attracted affluent consumers.
“We are experiencing growth propelled by our low prices, an expanded selection of products, and a robust eCommerce platform characterized by quicker delivery times,” remarked CEO Doug McMillon. “Our market share is growing, our revenue remains strong, and our inventory situation is healthy.” However, there are rising concerns that the new tariffs may present greater economic risks compared to those faced during Trump’s earlier presidency. Should consumers face another round of price increases, economists warn of potential widespread spending cutbacks, with significant implications beyond just Walmart’s revenues.
Recent government data released last week indicated a sharp decline in retail sales for January due to inclement weather keeping consumers indoors, recording the largest drop in a year, significantly exceeding economists’ forecasts.
Walmart, which is headquartered in Bentonville, Arkansas, announced earnings of $5.25 billion, or 65 cents per share, for the quarter ending January 31, down from $5.49 billion, or 68 cents per share, during the same period last year. Adjusted earnings per share for the latest quarter were reported at 66 cents. Sales climbed 4.1% to reach $180.55 billion for that quarter.
Analysts had predicted earnings of 65 cents per share on $180.07 billion in sales, according to FactSet. For the U.S. division, comparable store sales—which include both online sales and those from locations open for the past year—rose by 4.6%, a slight decrease from the 5.3% experienced in the previous quarter. The company recorded a 4.2% increase in its U.S. sales for the second quarter and a 3.8% increase for the first quarter.
Global e-commerce sales saw a 16% rise during the last quarter, although this was notably less than the 27% surge in the third quarter. Looking forward, Walmart expects its first quarter earnings per share to range from 57 cents to 58 cents, falling short of the 64 cents that Wall Street had anticipated. For the full year, Walmart projects earnings per share between $2.50 and $2.60, again below analysts’ expectations of $2.77.
Walmart forecasts that quarterly sales will increase by 3% to 4%, translating to between $166.35 billion and $167.97 billion, which is slightly lower than the anticipated $167.05 billion. For annual sales, the company expects a rise between 3% and 4%, amounting to approximately $667.57 billion to $674.05 billion, also falling short of the $708.72 billion Wall Street had projected.
