Walmart Plunges Most In Year On Dismal Earnings Forecast

Walmart exceeded Bloomberg analysts’ expectations for fourth-quarter US comparable sales and adjusted earnings per share. However, its first-quarter and full-year profit guidance missed, citing ongoing pressure from its product mix and an uncertain economic environment. Shares are down nearly 8% in premarket trading as the one-year non-stop rally hits a wall. 

The discount retailer and the nation’s largest grocer—recognized by Goldman as offering the best prices for US consumers—reported a 20% surge in e-commerce sales for the holiday quarter. The results included $180.6 billion in total revenue and $7.9 billion in operating income, exceeding Wall Street expectations.

Here’s a snapshot of fourth-quarter earnings (courtesy of Bloomberg):

• Total US comparable sales ex-gas +4.9%, estimate +4.66%

• Walmart-only US stores comparable sales ex-gas +4.6%, estimate +4.36%

• Sam’s Club US comparable sales ex-gas +6.8%, estimate +4.99%

• Adjusted EPS 66c, estimate 65c

• Change in US E-Commerce sales +20%, estimate +17.9%

• Change in Sam’s Club e-commerce sales +24%, estimate +11.7%

More from Walmart’s earning release: 

However, Walmart’s earnings guidance for the first quarter and full year fell short of expectations, citing ongoing pressure from its product mix.

The retailer forecasted full-year adjusted earnings per share between $2.50 and $2.60, below the consensus estimate of $2.77.

• Sees adjusted EPS $2.50 to $2.60, estimate $2.77 (Bloomberg Consensus)

• Sees net sales +3% to +4%

For the first quarter forecast, Walmart expects adjusted EPS of $0.57 to $0.58, missing analysts’ forecast of $0.65.

• Sees adjusted EPS 57c to 58c, estimate 65c

• Sees sales +3% to +4%

The dismal outlook of Bentonville, Arkansas-based Walmart spooked the market. Shares are down 8% in premarket trading, set for the largest daily decline since mid-November 2023.

This selling jeopardizes the 77% over the past 12 months.

John David Rainey, the company’s chief financial officer, told Bloomberg in an interview on Thursday that the current guidance doesn’t include the potential impact of tariffs of President Trump’s broadening trade war. Walmart imports a tremendous amount of goods from China and food from Mexico. 

“We’ll work with suppliers. We’ll lean into our private brands” to keep prices low, Rainey said. 

“I would describe the consumer as steady,” Rainey said, adding that spending is far from a complete rebound. He said general merchandise sales are improving and demand from the holiday season was in line with in-house expectations. 

The multi-year inflation storm and resulting value wars among retailers have placed Walmart as the winner with its pricing power, able to offer consumers the best deals. Wealthy consumers have also traded to the retailer in the last year. 

CEO Doug McMillon wrote in a statement, ”We have momentum driven by our low prices, a growing assortment, and an ecommerce business driven by faster delivery times,” adding, ”We’re gaining market share, our top line is healthy, and we’re in great shape with inventory.”

Given the current guidance doesn’t include the potential impact of tariffs, the big question is whether the retailer will pass those extra costs along to the consumer and still be able to offer the best prices. 

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Walmart’s full earnings release: