Walmart Inc. has announced its fourth-quarter earnings for fiscal 2025, showcasing strong sales performance even as it navigates uncertainties about the economy, tariffs, and consumer spending. The giant retailer reported adjusted earnings per share of 66 cents, slightly above Wall Street's expectations of 64 cents, and total revenues hit $180.55 billion for the quarter, surpassing estimates of $180 billion.
The results reflect Walmart's success at maintaining competitive pricing, especially during tough economic times when inflation-weary shoppers are drawn to affordable options. CEO Doug McMillon asserted, "We have momentum driven by our low prices, a growing assortment, and an e-commerce business driven by faster delivery times." This momentum helped the retailer gain market share among higher-income customers, particularly with its online offerings and paid membership program, Walmart +.
Despite these positive outcomes, Walmart's forecast for fiscal 2026 has raised concerns among investors. The company projected adjusted earnings between $2.50 and $2.60 per share, which falls short of the $2.76 anticipated by analysts. The stock experienced a decline of up to 6% following the announcement, reflecting caution across the retail sector.
CFO John David Rainey elaborated on the cautious outlook during discussions with analysts. He noted, "There’s far from certainty in the geopolitical landscapes," highlighting the potential impact of tariffs on imported goods from Canada and Mexico. Rainey also emphasized, "We’re not going to be completely immune" to the effects of these tariffs, which could complicate Walmart's low-price strategy.
Walmart’s management did not factor potential tariff impacts directly within their guidance, yet the looming changes could challenge the company’s current model. The retailer has been enhancing its sourcing strategies to offset potential cost increases from tariffs, stating they will be "nimble with sourcing." For example, Walmart is exploring new suppliers for products like microwave ovens, anticipating tariff hikes on materials.
Key to Walmart’s stability is its two-thirds reliance on domestic sourcing, particularly within the grocery sector, which accounts for 60% of its U.S. business. Rainey expressed confidence about managing these challenges: "We’ll do the things we can," indicating Walmart's commitment to keeping prices low for customers. The latest fiscal year also saw grocery sales continue to drive inventory gains, alongside increased foot traffic and higher transaction values.
Other significant numbers from the earnings call included U.S. same-store sales growth of 4.6%, improved consumer traffic of 2.8%, and average ticket prices up by 1.8%. Notably, e-commerce sales surged by 20%, signaling Walmart’s successful integration of online platforms with its physical stores. These figures offer insight on consumer behavior, which has shifted toward essentials over discretionary purchases as inflation affects spending habits.
Market analysts have raised questions about the overall economy's impact on retail sales following stark declines reported earlier this year. Retail sales dropped unexpectedly by the largest margin seen over the past year, prompted by winter weather and other seasonal factors. Rainey indicated, "Those are temporary impacts," adding optimism about the resilience of consumer spending.
Looking at broader economic conditions, softening U.S. retail data has raised concerns about potential impediments to growth. Historical patterns suggest consumers may be more cautious moving forward, and factors such as the discussed tariffs could amplify this hesitancy. Federal Reserve summaries indicate businesses plan to pass increased input costs on to consumers, hinting at the potential for rising prices across the board.
Despite the current uncertainty, Walmart remains focused on growth initiatives outside traditional retail. New revenue streams, including their advertising business and membership services, have experienced double-digit growth, contributing higher margins compared to Walmart's retail business.
Rainey emphasized the importance of maintaining strong delivery networks to optimize e-commerce success: "Faster and more frequent deliveries have helped make our e-commerce business more profitable." The company is seeing significant uptake of express delivery services, particularly during peak shopping times like the holiday season.
With annual revenue growth of 2.1% reported at $681 billion for fiscal 2025 and operating income up by 8.6%, Walmart continues to stand as both a retail leader and economic indicator. The company hiked its dividend by 13%, reaching 94 cents per share, signaling confidence even amid challenges. Walmart’s effective management strategies and commitment to customer service position it well to navigate uncertainties, albeit with cautious optimism as it heads toward fiscal 2026.