Key Points:
- Walmart warned that President Donald Trump’s newly announced tariffs could weigh on its first-quarter profits, although the retail giant expects overall sales growth to remain steady both during the quarter and for the full year.
- In a press release issued ahead of its investor event, Walmart stated it aims to “maintain flexibility” to respond to pricing pressures stemming from the tariffs. The company widened its first-quarter operating income forecast but did not provide an updated specific range.
- The retailer reaffirmed its full-year guidance despite the shifting economic landscape and volatility caused by trade policy changes.
DALLAS — In a strategic shift prompted by escalating trade tensions, Walmart has withdrawn its specific outlook for first-quarter operating income, citing increased uncertainty from sweeping tariffs on imports from China, Vietnam, and other key sourcing nations.
According to F.M.I.E Sources, Walmart emphasized the importance of maintaining pricing flexibility as it navigates higher import costs. While it originally projected a 0.5% to 2.0% increase in adjusted operating income for the fiscal first quarter, that forecast has now been placed under review. Nonetheless, Walmart held firm on its expected 3% to 4% growth in sales for the quarter.
The announcement came just before President Trump unveiled a 125% tariff on Chinese imports and a temporary 10% tariff reduction for goods from dozens of other nations. Treasury Secretary Scott Bessent noted that over 70 countries had already opened discussions with the White House regarding the new trade measures.
Despite the macroeconomic headwinds, Walmart shares surged more than 9% on the same day, reflecting investor confidence in the company’s adaptability.
John David Rainey, Walmart’s CFO, remarked during the presentation that, “Operating income has become harder to predict given the current backdrop,” and the company is “still working through what this new tariff environment means for us.” Rainey noted that about two-thirds of Walmart’s U.S. merchandise is domestically produced, but key imports from China and Mexico still play a significant role.
Sales within Walmart’s general merchandise category—typically more profitable than groceries—were softer earlier in the quarter but have shown signs of recovery as the period progressed.
“Our focus is on the long term,” Rainey added. “We’ve consistently seen that leaning into periods of economic uncertainty strengthens our market position—and we expect the same this time.”
Other major corporations are echoing Walmart’s concerns. Airlines like Delta have cited reduced demand amid the trade war, delaying expansion plans in the second half of the year.
Despite the tariff-related unpredictability, Walmart reaffirmed its fiscal year guidance, forecasting 3% to 4% net sales growth and adjusted operating income increases of 3.5% to 5.5%, accounting for challenges like the leap year and its acquisition of smart TV brand Vizio.
The company is also forecasting full-year earnings per share of $2.50 to $2.60, including a $0.05 hit from currency fluctuations.
Beyond tariffs, Walmart attributed its revised income guidance to rising insurance-related expenses and a less profitable merchandise mix—driven by value-conscious shoppers increasingly opting for essentials over discretionary purchases.
Navigating a “Fluid Environment”
Walmart’s leadership addressed the complexities of the current retail environment during the two-day investor summit in Dallas. CEO Doug McMillon opened the event by acknowledging the unpredictable business climate, joking that it made things “really exciting.”
“We’ve learned how to manage through turbulent periods,” McMillon said. “The past few years have been one challenge after another, but we’ve emerged stronger.”
He added, “It’s a fluid environment, and while we don’t know every turn ahead, we know our mission: keep prices low, manage inventory tightly, and control our costs.”