Walmart, the largest retailer in the United States, said on Thursday that strong holiday sales propelled its revenue to another annual record but flagged slower growth ahead, as shoppers face stubborn inflation, the uncertain impact of tariffs and a potential rise in unemployment.
Walmart, which brings in millions of customers each week, is a bellwether of U.S. consumer trends. Investors recoiled at the weaker-than-expected forecast, a rare loss of momentum for the company that has posted a series of bumper results.
Walmart said sales rose to $681 billion in its latest fiscal year, which runs through January, a 5.1 percent increase from the year before. The retailer’s annual profit jumped faster than sales, to around $20 billion.
The crucial holiday shopping season was a strong one for the retailer, with more people visiting stores and shopping online last quarter, and spending more on each visit. E-commerce sales in the United States jumped 20 percent.
But looking ahead, the company said that it expected revenue to increase only 3 to 4 percent this year. That was a little lighter than analysts expected, and Walmart’s stock dropped more than 6 percent, erasing tens of billions of dollars in market value.
“Our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions,” John David Rainey, Walmart’s chief financial officer, said on a call with analysts.
Mr. Rainey as well as Doug McMillon, Walmart’s chief executive, said they remained confident in their strategy, particularly for newer, high-margin segments like the retailer’s fast-growing advertising business.
“The company had a very strong 2024 and the company has had a number of very strong years since the onset of the pandemic,” said David Silverman, a retail analyst at Fitch Ratings. “It’s just mathematically a challenge to maintain these levels of growth.”
For a sense of scale, Walmart’s revenue grew by about $32 billion last year, or the equivalent of Dollar Tree’s entire annual revenue.
As Walmart has said for the past few years, higher-income shoppers, which the retailer defines as those making more than $100,000, helped it gain market share. These consumers are better able to absorb higher prices, as inflation has recently ticked up. Walmart called out soaring egg prices as a major factor pushing prices higher in recent months.
Walmart said its inventory levels increased 3 percent last quarter. In response to President Trump’s threat of tariffs, analysts have expected retailers like Walmart would order more goods from China and elsewhere to get ahead of the levies.
“The biggest challenge on the horizon for Walmart and everybody else is how the tariffs picture clears up,” said Sheraz Mian, director of research at Zacks Investment Research.
Walmart said its forecast did not account for the effects of tariffs. “Tariffs are something we’ve managed for many years and we’ll just continue to manage that,” Mr. McMillon said on the call. “We can’t predict what will 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 goal.”
The comments echoed what Walmart’s executives said weeks after President Trump was re-elected. In November, they sought to allay concerns on Wall Street about its exposure to tariffs by saying that about two-thirds of the merchandise it sells comes from the United States. This is, in part, because of Walmart’s large grocery business.
Still, executives acknowledged that if new tariffs were imposed, they would probably increase prices.
Lower-income shoppers have less flexibility in their budgets to absorb higher prices. Despite Walmart attracting wealthier shoppers, its customer base still largely skews toward those with lower incomes.
The decline in Walmart’s shares on Thursday put a dent in the strength of the stock, which over the past 12 months has jumped more than 60 percent, greatly outperforming the broader market as well as competitors like Amazon and Target.
“The stock has literally been received as if it was one of these highflier tech stocks — so very strong momentum,” Mr. Mian said. “The question has always been, when does that trend slow down and when does the stress and pressure of its lower-income customers start showing up in results?”
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