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Walmart rang up record sales but warned of slower growth this year, sending its shares sliding.
The world’s biggest retailer reported full-year revenue of $681bn, the highest of any company worldwide and up by 5.1 per cent, or $32.9bn, from the year before. Operating income rose 8.6 per cent, near the lower end of management’s previous guidance.
For the current financial year, Walmart predicted weaker growth, with a rise of 3 to 4 per cent in net sales and 3.5 to 5.5 per cent in adjusted operating profit in newly published guidance, a deceleration from last year if realised.
Wall Street had been expecting revenue growth of 4.2 per cent and a rise of more than 11 per cent in operating profit, according to a survey of analysts by Visible Alpha. Shares were down 6.7 per cent during Thursday morning trading in New York.
Investors dumped shares amid concerns about consumer spending as US President Donald Trump imposes new tariffs on trading partners and threatens deportation for millions of immigrants, a move that could reduce numbers of shoppers at Walmart stores and workers in its supply chain.
“Tariffs are something we’ve managed for many years, and we’ll just continue to manage that,” chief executive Doug McMillon told analysts on Thursday.
Walmart executives said that their guidance in part reflected one-off costs related to the company’s purchase of Vizio, a connected television company, last year.
“We have to acknowledge that we are in an uncertain time and we don’t want to get out over our skis here,” chief financial officer John David Rainey said. “There’s a lot of the year to play out. Again, we feel good about our ability to navigate the environment, whether it’s tariffs or other macro uncertainty.”
For the fourth quarter that ended in January, Walmart said same-store sales rose 4.6 per cent at its namesake US outlets, beating Wall Street expectations by 0.1 percentage points. Sales in the quarter, which ended in January, were stronger than the overall rise in US retail sales during the holiday shopping season.
Global revenue in the quarter increased 4.1 per cent to a record $180.6bn, slightly more than the consensus estimate of $180.4bn, according to analysts polled by Visible Alpha. Net income of $5.3bn was down 4.4 per cent from a year ago but beat the consensus forecast of $5.2bn.
The Arkansas-based company’s quarterly revenue fell short of rival Amazon’s for the first time. The ecommerce group earlier this month reported that fourth-quarter revenue rose 10 per cent year on year to $187.8bn. Amazon’s revenue includes its cloud computing business.
Walmart, once seen as endangered by Amazon, flourished in the past year. It grabbed business from other brick-and-mortar chains, built up its online order and delivery presence and expanded in profitable niches such as sales of advertising to its suppliers, memberships to its customers and shipping services for third-party merchants.
Walmart’s shares soared by 82 per cent in the year to Wednesday as it repeatedly raised guidance for sales and profits in 2024. The company’s reputation for rock-bottom prices has attracted consumers amid stubborn US inflation.
Justin McAuliffe, research analyst at Gabelli Funds, said: “It’s sort of par for the course for Walmart to guide conservatively, and set themselves up to beat and raise over the course of the year.”
Executives have said that its ecommerce business, which includes online orders from its inventory and a Walmart-run third-party marketplace, has drawn higher-income US households as interested in convenience as low prices.
Walmart has been able to boost profit margins with businesses such as sales of advertising to its vendors, a business that grew by 29 per cent in the quarter.
Walmart’s ecommerce sales rose 16 per cent year on year, slower than in previous quarters. The company said the rate of growth was hit by the timing of an annual sales event at its Flipkart subsidiary in India, which took place in the third quarter last year.
Executives also announced that PhonePe, an India-based digital payments platform in which Walmart has a majority stake, intends to list on domestic exchanges through an initial public offering.
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