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NEW YORK (AP) — Walmart delivered another year of strong sales and profits as its competitive prices became a strong magnet for inflation-weary shoppers. Yet uncertainty about the state of the American consumer and the potential impact of tariffs have seeped into expectations for 2025.
The financial outlook from nation's largest retailer, which has thrived amid stubborn inflation, delivered a jolt across the retail sector. Walmart sees per share profit over the next year coming in as much as 27 cents below analyst projections, a notable shift that sent company shares down more than 6% in midday trading.
Its sales outlook was also mild, potentially a reflection of challenges ahead as consumers pull back on spending and President Donald Trump's tariffs on China and other countries threaten the low-price model that is the core of Walmart's success.
During an interview with The Associated Press Thursday, Walmart's Chief Financial Officer John David Rainey said shoppers remain resilient while cautious, but there is no apparent change in behavior related to tariffs.
There is more uncertainty about what lies ahead and Rainey said Walmart's measured guidance reflects that.
“We are one month into the year, and there’s a lot that we don’t know,” Rainey said, citing the new tariff increases.
Walmart did not incorporate tariffs into its financial outlook, but Rainey acknowledged that the company's isn't immune to their impact.
“We're going to work really hard to keep prices low for our members and customers,” Rainey said. “We will do the things that we can."
That means being nimble with sourcing. Walmart, for example, is exploring new sourcing for microwave ovens given increased tariffs on aluminum and steel. But Rainey said some goods may have price increases.
Tariffs in the headlines have fueled concern and some more shopper retrenchment in Walmart’s Mexico business, Rainey said.
Walmart has built in hedges against some tariff threats. Two-thirds of Walmart's merchandise is sourced in the U.S., with groceries driving much of that. Groceries account for roughly 60%, of Walmart's U.S. business.
Still, Walmart shares took a hit, and other big retailers fell, too.
Walmart is among the first major U.S. retailers to report financial results and the numbers can provide a hint as to the mood of the American shopper. Over the past year Americans have focused increasingly on necessities rather than big TVs, furniture or appliances. They've become much more discerning because of higher costs for credit as well as for groceries.