Updated 4:32 p.m. ET Feb. 20
Walmart shares fell sharply Thursday even as the retailer reported a strong fourth quarter in terms of profits and sales.
While the quarterly results were for the most part better than expected, apparently Wall Street expected the outlook to be better and pulled Walmart’s stock price down about 6.5 percent to close at $97.21 on Thursday.
Investors are also concerned about the potential impact of new tariffs, but Doug McMillon, the retailer’s president and chief executive officer, addressed the issue during the conference call Thursday, stating, “Tariffs are something we’ve managed for many years. We’ll just continue to manage that. We’ve got a great team. We know how to do that. 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 will be our ultimate goal.”
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During Thursday’s conference call, McMillon said, “As we look at our results for the quarter and the year, we’re pleased to see a healthy top line. We’re strengthening our ability to serve people how they want to be served in the moment. That’s what’s driving our growth. Our prices are low, and we’re becoming more convenient. Customers are shopping with us more often and buying more items, including in general merchandise categories, which were up low-single digits in Walmart U.S. and Sam’s Club U.S. for the quarter.
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“Second, we’re growing profit faster than sales, and we have runway to scale our higher-margin businesses like membership, marketplace and advertising,” McMillon added. “We’re mixing ourselves up while simultaneously investing in lower prices and associate wages.
“If I could change anything about how we’re perceived today, it would be that more people know about our breadth of assortment online and our increasing delivery speed,” McMillon said.
Walmart U.S. recently unveiled same-day pharmacy deliveries, in addition to providing same-day food and general merchandise deliveries. Sam’s Club also recently launched a new shipping offer, including free same- or next-day delivery. Store fulfilled delivery catchment areas reach 93 percent of U.S. households with same-day delivery, John David Rainey, Walmart’s chief financial officer and executive vice president, said during the conference call.
Rainey detailed performances by category, indicating that last quarter, groceries saw midsingle-digit growth and health and wellness grew in the mid-teens. General merchandise generated low-single-digit growth, with hardlines, toys, home and fashion the best-performing categories.
Discussing the inflation issue, Rainey said, “Our focus on bringing down pricing through rollbacks continues despite pockets of food inflation in areas like eggs, bacon and ground beef. Like-for-like pricing in general merchandise and consumables was deflationary while food remained inflationary in the low-single digits. We’re seeing higher engagement across income cohorts with upper income households continuing to account for the majority of share gains.”
David Silverman, senior director, Fitch Ratings, commented: “Walmart continues to prove its status as a best-in-class retailer with solid revenue and profit growth in a choppy holiday quarter. The company saw expansion across its U.S. stores and e-commerce business, increased revenue in its Sam’s Club and international segments, and demonstrated strong growth in nascent businesses like advertising.
“Despite some ongoing consumer spending volatility and the company’s increasingly challenging comparisons, Walmart expects continued top-line growth in the 3 percent to 4 percent range in 2025,” Silverman added. “While the growth implies some moderation to recent results given challenging comparisons, Walmart could add around $25 billion in revenue in 2025, yielding over $700 billion in annual company sales. Growth of 3 percent to 4 percent would also imply continued share gains given Fitch’s view of more modest growth in overall retail sales.
“These share gains despite Walmart’s already massive scale are the result of the company’s strong customer connections and robust omnichannel infrastructure, allowing it to consistently improve value to customers through customer experience enhancements and price gaps to peers.
“Fitch expects retail choppiness to continue in 2025, given recent moderation to consumer sentiment, particularly for lower end consumers, shifts in behavior benefitting consumer services, and potential headwinds like tariffs, which could pressure prices. However, Walmart’s good operating base and execution should enable it to successfully manage through unpredictability and likely fortify its longer-term market position.”
For the period ended Jan. 31, the Bentonville, Ark.-based retail behemoth reported revenues of $180.6 billion, up 4.1 percent from $175.4 billion in the year-ago period. The growth was bolstered by consumers across all income levels scrambling for low prices to offset the impact of inflation.
Operating income reached $7.9 billion, up 8.3 percent from $7.3 billion in the year-ago period.
Net earnings, however, declined to $5.25 billion, or 65 cents a share, compared with $5.49 billion, or 68 cents a share, in the year-ago period.
Adjusted earnings per share for the most recent quarter were 66 cents. That excludes one-time costs including the effect of a net loss of $0.02 on equity and other investments as well as $0.01 from the proceeds of an opioid-related legal settlement.
Walmart is the first of the nation’s major retailers to report fourth-quarter results, and is widely considered a barometer of the consumer mindset and the state of the industry.
“Our team finished the year with another quarter of strong results,” McMillon said in a statement Thursday. “We have momentum driven by our low prices, a growing assortment and an e-commerce business driven by faster delivery times. We’re gaining market share, our top line is healthy, and we’re in great shape with inventory. We’ll stay focused on growth, improving operating margins and strengthening ROI as we invest to serve our customers and members even better.”
For the first quarter of this year, Walmart anticipates sales gains of 3 to 4 percent; adjusted operating income of 0.5 percent to 2 percent, and adjusted earnings per share of $0.57 to $0.58.
For all of 2025, Walmart expects a 3 to 4 percent sales gain, adjusted operating income of 3.5 to 5.5 percent, and adjusted earnings per share of $2.50 to $2.60.
The company said it raised its dividend 13 percent to $0.94 per share, and noted that it represented the retailer’s largest dividend increase in more than a decade.
In another highlight, Walmart completed its $2.3 billion acquisition of Vizio, which sells televisions, sound bars and home theater systems, and should be a strong source for advertising dollars.
Walmart U.S., the retailer’s best-performing division, reported fourth-quarter net sales of $123.5 billion, up 5 percent from $117.6 billion in the year-ago period. In the U.S., the company cited market share gains primarily from upper-income households, broad-based sales momentum across merchandise categories, and strong seasonal sales despite the compressed 2024 holiday shopping season.
Walmart also cited expedited delivery channels resonating with customers desiring speed of delivery, and comp sales growth led by transaction counts and unit volumes.
Walmart International reported fourth-quarter net sales of $32.2 billion, slightly down from $32.4 billion in the year-ago period.