Walmart, the largest retailer in the United States, said its revenues on another annual record on Thursday as shoppers face stubborn inflation, uncertain effects of tariffs and potentially rising unemployment. He said he raised it but has slowed growth.
Bringing millions of customers each week, Walmart is a disappointment to the trends of US consumers. Investors reacted with weaker predictions than they expected. This is a rare loss of momentum for the company that posted a series of bumper results.
Walmart said its revenue rose to $681 billion in its most recent fiscal year, up 5.1% from the previous year that continued into January. Retailers' annual profits rose to about $20 billion, faster than revenue.
The crucial holiday shopping season has been a strong season for retailers, spending more on each visit, visiting stores, shopping online, and visiting each visit last quarter. E-commerce sales in the US increased by 20%.
“We are gaining market share. Our top line is healthy and in very good stock,” Walmart CEO Doug McMillon said in a statement.
But looking ahead, the company said it expects revenue to rise by 3-4% this year. It was a little lighter than analysts had expected, with Walmart stocks down around 8% in pre-market trading.
“The company has had a very strong year in 2024 and a very strong year since the onset of the pandemic,” said David Silverman, retail analyst at Fitch Rating. “Mathematically, maintaining these levels of growth is a challenge.”
As Walmart has said over the past few years, high-income shoppers, who define retailers as those who make more than $100,000, have helped them gain market share. These consumers can absorb higher prices as inflation is inscribed recently. Walmart has called for a surge in egg prices as a major factor in increasing prices in recent months.
Walmart said inventory levels had risen 3% in the last quarter. In response to President Trump's tariff threat, analysts hope retailers like Walmart will order more items from China and elsewhere to preempt taxation.
“We are committed to providing a wide range of research and developments,” said Sheraz Mian, research director at Zacks Investment Research.
In November, Walmart tried to ease concerns with Wall Street about tariff exposure, saying that about two-thirds of the items it sells came from the US. This is because of Walmart's large grocery business.
Still, Walmart's finance director John David Rainey said in an interview at the time that the company expected that if new tariffs were imposed, they would be inflationary rates for its customers.
Low-income shoppers have less budget flexibility to absorb higher prices. Despite the company's increasingly attracting wealthy shoppers, its customer base remains largely skewed towards people with low incomes.
A decline in Walmart stocks on Thursday led to over 70% jumping over the past 12 months, delivering significant performances as well as competitors such as Amazon and Target.
“The stocks were literally taken as if they were one of these high fly high tech stocks. They're having a lot of momentum,” Mian said. “The question is always, when will that trend slow down and when will the stress and pressure of low-income customers begin to appear in the results?” he added.
