Yahoo Finance

We talked about earnings. Walmart shares, they are on the move for ticker symbol WMT, lower though by about 4.7% pre-market after the company's full-year profit forecast fell short of analysts' expectations. The cautious guidance sparking concern that an uncertain economic outlook and tariff backdrop is impacting the historically resilient retailer. Joining us now to break down the latest print, we've got Yahoo finances Brooke DiPalma. Brooke, I mean you were just sitting there off camera still listening into the earnings call. Okay, alright, so what did we hear?

Just ended. The call just ended. Yeah. Well, tariffs was a focus eventually in the call. It didn't come out right at first, but an analyst did ask about it. Now, we know that Walmart touts that about two thirds of its products are made, grown or assembled in the US. And so they have a bit of lower exposure compared to their retailer peers, but executives eventually did weigh in on it on the call. Take a listen.

Tariffs are something we've managed for many years and we'll just continue to manage that. We've got a great team, we know how to do that. We can't predict what'll happen in the future, but we can manage it really well. And we're wired to try and save people money. So that'll be our ultimate, ultimate goal. We don't have any explicit assumption in our guidance around tariffs. We feel like we'll be able to navigate that. Will it turn out differently than maybe what we expect today? Perhaps, and we feel good about our our ability to do that though.

Something interesting here is that global inventory is up 2.8%. The company did say they said that they pulled a bit forward around the edges that they're selling through that stuff quickly, so they're in a good place to kick off February. But in the past as we've heard from CFO John David Rainey, that cost, that brunt might eventually have to trickle down to the consumer. And should that happen, should these tariffs go into effect, we also know that their private label business could potentially benefit as well.

Yeah, Brooke, one of the big issues and why we're seeing such a decline here in pre-market trading has a lot to do with the guidance and some of the concern that maybe this points to going ahead here for Walmart.

Yeah, that was one of my big top takeaways from the earnings results this morning was that conservative 2026 guidance or fiscal year 2026 guidance that they had set out. And CFO John David Rainey saying on the call this morning that they're operating in a highly dynamic backdrop for several years and they expect this year to be no different. Now, they do expect net sales to increase in the range of 3 to 4%. That would be lower than how they ended this recent fiscal year, but he calls it a relatively stable environment or assuming that it will be that and acknowledges that there are still uncertainties related to the consumer behavior and global economic and geopolitical conditions. Now, another top takeaway is this strength in the US grocery business that we continue to see as well as strength from their wholesale retailer Sam's Club. We know that 60% of US sales are that grocery business. We saw that business increase mid-single digits, as well as Sam's Club's, their membership model hit all-time high. Their renewal rates, rather. They also boosted up inventory there. And a last final top takeaway here is this ongoing trend that they continue to gain higher income shoppers. This has been going on for years from Walmart, especially post-COVID, as they've really doubled down this idea of making sure that they deliver that value, but also that convenience. We saw Walmart Plus membership income grow double digits during the quarter, and also they've been doubling down on that same day delivery ultimately to compete with Amazon seems to be working here.