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Shares of Walmart (NYSE: WMT) are climbing on Wednesday. The retail giant's stock gained 7% as of 1:15 p.m. ET. The rise comes as the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC) continued to see heightened volatility.
Walmart announced today that it was lowering income expectations for the current quarter. Despite the lowered target, investors appeared to focus on the fact the company reaffirmed its top-line guidance.
Investors were unfazed
Walmart adjusted its first-quarter outlook for operating income. Leadership is concerned with the impacts of Trump's sweeping tariffs, particularly those placed on China and Vietnam. The company had previously projected an increase of 0.5% to 2% in adjusted operating income for Q1. While it didn't offer specifics, the company widened the range.
Investors appeared to forgive the adjustment, choosing to focus on Walmart's maintained first-quarter sales outlook of 3% to 4% growth. It also reaffirmed guidance for the full year.
Walmart may have an advantage
During an investor presentation, CFO John David Rainey emphasized Walmart's structural advantages that could help it weather trade disruptions better than competitors. He noted that about two-thirds of what Walmart sells in the U.S. is made, grown, or assembled domestically, limiting direct exposure to tariffs compared to retailers with higher import dependencies.
Rainey's statement of "when we lean into these periods of economic uncertainty, Walmart emerges on the other side with greater share and a stronger business" appeared to resonate with investors. This historical pattern suggests Walmart could potentially gain market share from rival retailers that rely more heavily on China and foreign manufacturing.
As promising as this rise is, given the level of uncertainty in the market, I would hold off on further investment in Walmart until more clarity emerges regarding tariffs.
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