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Walmart delivered another impressive quarter as the promise of lower prices and speedy deliveries attracted a broader spectrum of Americans during the critical holiday shopping period. Despite strong performance, the retail giant’s cautious outlook suggests concerns about economic volatility ahead.
“Given that we are as large as we are and so tied to consumer health and the economy, we want to maintain maximum flexibility and not get out ahead of ourselves at this point in the year,” Walmart’s Chief Financial Officer John David Rainey told investors during the earnings call, citing subdued consumer sentiment, a fragile job market, and student loan delinquencies.
In a significant market shift, Walmart has been dethroned as the nation’s largest company by revenue. For the first time, the Arkansas-based retailer recorded annual sales lower than online giant Amazon. According to Fortune’s ranking of top U.S. corporations, Walmart’s full-year sales reached $713.2 billion, while Amazon delivered net sales of $716.9 billion, bolstered by its surging cloud service unit, advertising, and massive e-commerce business.
The quarterly results mark Walmart’s first report under new leadership. John Furner, 51, who previously headed the company’s U.S. operations, took over as CEO this month, succeeding Doug McMillon. During his decade-long tenure, McMillon transformed America’s largest retailer into a tech-powered giant and spearheaded an era of robust sales growth.
Walmart’s stock has risen more than 25% since its last quarterly earnings report, and earlier this month, it became the first non-tech company to reach a valuation exceeding $1 trillion—a testament to investor confidence in the retailer’s strategy and market position.
With more than 150 million customers visiting its stores or website weekly, Walmart’s performance is considered a barometer of consumer spending. While inflation has cooled, consumer prices have increased approximately 25% over the past five years, and many economists expect companies to begin passing on higher costs from increased U.S. tariffs to customers in the coming months.
The retailer’s promise of lower prices, improved merchandise, and faster delivery has broadened its customer base to include wealthier shoppers. The company reported its biggest gains in market share from households with annual income over $100,000, even as lower-income shoppers have become more restrained—reflecting what economists call a K-shaped economic recovery.
“We continue to see wallets are stretched, and in some cases, people are managing spending paycheck to paycheck,” Furner said during a conference call. “That said, even these households are emphasizing convenience nearly as much as price.”
Walmart has managed higher costs from tariffs by adjusting its product offerings, absorbing some costs, and diversifying sourcing. Rainey told The Associated Press that for the latest quarter, average prices for identical items rose slightly above 1%, with food prices up slightly less and general merchandise inflation exceeding 3%.
“I had a lot more trepidation nine months ago when tariffs were just starting to hit,” Rainey acknowledged, “but the company has done a good job in minimizing the impact to the consumer.”
For the quarter ended January 31, Walmart reported earnings of $4.24 billion, or 53 cents per share. Adjusted per-share results were 74 cents, slightly better than Wall Street expectations. Sales rose 5.6% to $190.7 billion, also edging out projections.
Comparable sales at Walmart stores, including online sales, rose 4.6% after a 4.5% increase in the previous quarter. The company reported strong performance across categories, particularly in groceries—a significant traffic generator—and cited fashion as another bright spot.
Expedited deliveries have fueled sales momentum, with orders delivered in less than three hours accounting for 35% of store orders. U.S. e-commerce business increased 27% during the quarter, representing 23% of overall sales.
Looking ahead, Walmart forecasts sales to increase between 3.5% and 4.5% for the current quarter, with earnings per share in the range of 63 to 65 cents. For the full year, it expects sales to reach $706.4 billion with earnings per share of $2.64—slightly below Wall Street’s projections of $712.6 billion in sales.
As Walmart navigates economic uncertainties and changing consumer preferences, its ability to balance competitive pricing with operational efficiency will be crucial to maintaining its market position against digital rivals like Amazon.
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6 Comments
While Walmart’s sales performance remains strong, the shift in rankings with Amazon highlights the need for the retail giant to continually innovate and adapt to changing consumer preferences and market dynamics.
Maintaining flexibility and not getting ahead of themselves is a prudent approach for Walmart given the current economic uncertainties. Their ability to attract a broad spectrum of consumers during the holidays is impressive.
It’s impressive that Walmart is maintaining strong sales despite broader economic concerns. Their cautious outlook is understandable given the volatility in consumer sentiment and the job market.
The muted outlook from Walmart is a reflection of the fragile consumer sentiment and job market conditions. It will be crucial for them to adapt their strategies to stay competitive in this volatile environment.
The shift in rankings with Amazon overtaking Walmart as the largest U.S. company by revenue is a significant market development. It will be interesting to see how Walmart adapts to the changing retail landscape.
Walmart’s transition to new leadership is also a factor to watch, as they navigate these market shifts.