Walmart forecast profit, sales below Wall Street estimates, shares fall

Walmart on Thursday forecast sales and profit for the fiscal year ending January 2026 below Wall Street estimates, suggesting the world's largest retailer expects inflation-weary consumers to pull back after several quarters of solid growth. 

Walmart shares, which had risen about 72 per cent in 2024 and hit a record high of $105 last week, were down 6 per cent in early trading. 

Shares of rival retailer Target were down 1.6 per cent, with Amazon 0.9 per cent lower. 

The company forecast adjusted earnings per share for the fiscal year ending January 2026 in the range of $2.50 to $2.60, below analysts' expectations of $2.76, according to data compiled by LSEG. 

 

Walmart's lower-than-expected guidance is a warning that US consumer spending is slowing, said Brian Mulberry, client portfolio manager at Zacks Investment Management, a Walmart investor. 

"At the moment the labor market is still strong," he said, adding that if Walmart's soft guidance is followed by a decline in jobs, "it would be a strong signal that economic growth is slowing." 

Walmart said annual sales are expected to rise between 3 per cent and 4 per cent. Analysts had expected 4 per cent growth. 

The sales outlook includes a 20 basis point impact from the negative effect of an additional day in the leap year of 2024, and a boost of 20 basis points from the acquisition of smart-television manufacturer Vizio, the company said. 

As one of the first major US retailers to shed light on the crucial holiday quarter and the current year, Walmart's forecast hints at how the retailer expects to fare under President Donald Trump's additional tariffs on goods made in China, and the threat of 25 per cent tariffs on products made in Mexico and Canada. 

Despite issuing disappointing guidance, Walmart sees US shoppers as "resilient" and focused on value, Chief Financial Officer John David Rainey said on a post-earnings call. 

He said the retailer did not include an assumption of new US tariffs in its guidance, but said Walmart can manage any new duties well, without offering details. 

"We're one month into the year, so I think it's prudent to have an outlook that is somewhat measured. We don't want to get ahead of ourselves, there is certainly some unpredictability in any environment that we have, but we feel really good about our ability to navigate that," Rainey said. 

US retail sales experienced their largest monthly decline in two years in January, hampered by frigid temperatures, wildfires, and motor vehicle shortages. 

But Walmart appeared to remain unscathed with total US comparable sales rising 4.6 per cent in the fourth quarter, with January being its strongest month for sales, Walmart said. That surpassed analysts' estimates of a 4.15 per cent increase. 

Higher income customers or households making six figures were the top drivers of market share in the latest quarter, Walmart said, with seasonal merchandise, auto and home products being top draws. General merchandise sales rose in the low-single-digits, while grocery sales rose in the mid-single digits, helped in part by higher sales of its in-house brands. 

The company also noted higher sales of GLP-1 drugs in the quarter. Overall, transactions, excluding fuel, rose 2.8 per cent at its more than 4,600 US stores with average checks at the till rising 1.8 per cent.  US e-commerce sales rose 20 per cent, the retailer said, adding that one-third of shoppers elected to have deliveries in three hours or less. 

For the first quarter it expects consolidated net sales to rise between 3 per cent and 4 per cent, compared to expectations of 3.3 per cent growth. 

Fourth quarter adjusted earnings came in at 66 cents per share, topping expectations by 2 cents. Sales rose 4.1 per cent to $180.6 billion.   

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