Walmart experienced a strong performance throughout 2024, but potential challenges loom in 2025, reports AP.
The retail giant achieved another year of solid sales and profits, with its competitive pricing continuing to attract inflation-conscious shoppers. However, uncertainties in the economic landscape suggest difficulties ahead.
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Walmart’s 2025 earnings forecast falls short of analysts’ expectations by as much as 27 cents per share, while its quarterly outlook is up to 7 cents below Wall Street projections. The company's sales forecast is also underwhelming, possibly signalling growing obstacles as consumer spending weakens and President Donald Trump's tariffs on China and other nations pose a threat to Walmart’s low-price strategy.
Despite implementing measures to mitigate some tariff risks, Walmart remains vulnerable. Groceries, which constitute about 60% of its U.S. business, are largely unaffected by international trade policies. However, Walmart's stock plunged nearly 9% before Thursday’s market opening, dragging down other major retailers, including Target, which saw a 2% decline.
As one of the first major U.S. retailers to release quarterly results, Walmart’s numbers provide insight into consumer sentiment, especially in light of new trade barriers that many economists fear could drive inflation higher. Over the past year, shoppers have prioritised essential purchases over discretionary items like electronics, furniture, and appliances, exercising greater caution due to rising costs for both credit and groceries.
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Walmart has thrived in this environment, leveraging its scale to maintain lower prices and gain market share, particularly among households earning over $100,000. Its e-commerce expansion and Walmart+ membership programme have also drawn wealthier customers.
“We have momentum driven by our low prices, a growing assortment, and an eCommerce business focused on faster delivery times,” said CEO Doug McMillon. “We’re gaining market share, our top line is healthy, and our inventory is in great shape.”
Nevertheless, the company may face heightened challenges as the new tariffs present greater economic risks compared to Trump’s first term. Economists warn that if Americans experience another wave of price increases, consumer spending—accounting for 70% of the U.S. economy—could decline broadly, impacting not just Walmart’s sales but the economy at large.
Recent government data showed a sharp decline in January retail sales, partly due to cold weather, though the drop was larger than expected—the biggest in a year. While December sales were revised higher, it may suggest consumers are cutting back after holiday spending. Meanwhile, grocery prices, a persistent concern for American households, have continued to rise.
Walmart, headquartered in Bentonville, Arkansas, reported quarterly earnings of $5.25 billion, or 65 cents per share, for the period ending Jan. 31, compared to $5.49 billion, or 68 cents per share, a year earlier. Adjusted earnings per share stood at 66 cents.
Quarterly sales grew by 4.1% to reach $180.55 billion, surpassing analysts’ forecast of $180.07 billion, according to FactSet.
Comparable sales for Walmart’s U.S. division—including online and physical stores open for at least a year—rose 4.6%, slightly below the 5.3% increase in the previous quarter. The company reported a 4.2% rise in the second quarter and 3.8% in the first quarter.
Global e-commerce sales climbed 16% in the latest quarter, a slowdown from the 27% growth seen in the third quarter.
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For the first quarter, Walmart expects earnings per share between 57 and 58 cents, well below Wall Street’s 64-cent projection. For the full year, the company anticipates earnings per share of $2.50 to $2.60, falling short of the $2.77 analysts predicted.
The retailer projects a 3% to 4% rise in quarterly sales, ranging between $166.35 billion and $167.97 billion, which could disappoint analysts who expected $167.05 billion.
For the year, Walmart forecasts sales growth of 3% to 4%, reaching between $667.57 billion and $674.05 billion—significantly lower than analysts’ estimate of $708.72 billion, according to FactSet.