Walmart shares tumble as retail giant faces modest profit outlook, despite strong holiday sales

Walmart shares fell roughly 6% in early trading Thursday after the retailer announced that profit growth would slow in the upcoming fiscal year, even as sales continue to climb. The company reported a 4% increase in holiday-quarter revenue, with e-commerce sales in the U.S. rising 20%, driven by gains in store pickup, home deliveries, and strong performance with upper-income shoppers. However, the retailer’s outlook for the next fiscal year disappointed Wall Street, contributing to the decline in stock price.

For the fiscal year ahead, Walmart expects net sales to grow by 3% to 4%, and adjusted operating income to rise between 3.5% and 5.5%, on a constant currency basis. However, this guidance includes a 150 basis point headwind from its acquisition of smart TV company Vizio and the extra day due to the leap year in 2024. The company’s adjusted earnings are forecasted to be between $2.50 to $2.60 per share, falling short of Wall Street’s expected $2.76 per share. This marked a notable slowdown compared to the previous fiscal year, where Walmart posted adjusted operating income growth of 9.7% on a constant currency basis.

For the fiscal fourth quarter, Walmart reported adjusted earnings per share of 66 cents, above analysts’ expectations of 64 cents. Revenue for the quarter came in at $180.55 billion, slightly surpassing the expected $180.01 billion. However, net income for the quarter fell to $5.25 billion, or 65 cents per share, down from $5.49 billion, or 68 cents per share, in the year-ago period.

Despite challenges, Walmart continues to see strong growth in its e-commerce business, with global e-commerce sales rising 16%. Its U.S. segment also performed well, with comparable sales up 4.6%, and Sam’s Club reporting a 6.8% increase in comparable sales, excluding fuel. The company also raised its dividend by 13% to 94 cents per share, the largest increase in over a decade.

The retailer’s cautious outlook reflects uncertainty about macroeconomic factors, including potential tariffs on imports from Mexico and Canada. Walmart’s Chief Financial Officer John David Rainey acknowledged the unpredictability in the geopolitical landscape and said the company will continue to navigate these challenges by working with suppliers and shifting its supply chain to mitigate costs. Despite these concerns, Walmart remains confident in its ability to adapt to a changing environment, underpinned by its strong e-commerce growth and strategic investments.

As of Wednesday’s close, Walmart shares have surged roughly 83% over the past year. The stock finished Wednesday at $104.00, marking a 15% increase since the start of the year, outperforming the S&P 500, which gained about 4% during the same period.