Walmart shares fell sharply Thursday after the retailer issued a cautious profit outlook for its fiscal year, despite reporting stronger-than-expected holiday quarter results and robust e-commerce growth. The company's stock dropped 8% in premarket trading as investors reacted to guidance that suggested slower earnings expansion ahead.
Walmart's fourth-quarter revenue rose 4.1% to $180.55 billion, surpassing analysts' expectations of $180.01 billion, while comparable U.S. sales grew 4.6%. E-commerce sales in the U.S. surged 20%, marking the 11th consecutive quarter of double-digit gains. However, the company's forecast for 3% to 4% sales growth in the upcoming fiscal year and 3.5% to 5.5% adjusted operating income growth fell below Wall Street's expectations.
Chief Financial Officer John David Rainey described consumer spending as "steady" but warned that uncertainty looms due to geopolitical factors. He also acknowledged that potential tariffs on imports from Mexico and Canada could impact Walmart's business. Walmart is "not going to be completely immune," Rainey said in an interview with CNBC. "We'll work with suppliers, lean into our private brand, and shift supply where necessary to take advantage of lower costs that we can then pass on to consumers."
For the quarter ending January 31, Walmart reported net income of $5.25 billion, or 65 cents per share, compared with $5.49 billion, or 68 cents per share, a year earlier. Adjusted earnings per share came in at 66 cents, slightly exceeding analysts' projections of 64 cents.
The company's Sam's Club division also reported strong results, with comparable sales excluding fuel rising 6.8%. Meanwhile, Walmart's global e-commerce sales climbed 16%, driven by gains in home delivery and store pickup services.
Despite the solid results, Walmart's guidance reflected a more measured outlook, with factors such as the acquisition of smart TV maker Vizio and the impact of the leap year acting as headwinds. The company's full-year adjusted earnings forecast of $2.50 to $2.60 per share was below the $2.76 per share expected by analysts.
CEO Doug McMillon sought to reassure investors, emphasizing Walmart's long-term strategy. "We have momentum driven by our low prices, a growing assortment, and an e-commerce business driven by faster delivery times," he said. "We'll stay focused on growth, improving operating margins, and strengthening return on investment."
Despite the stock's drop, Walmart announced a 13% increase in its annual dividend to 94 cents per share, the largest hike in over a decade. Rainey said the company has raised annual dividend for 52 years in a row.
Walmart's stock has been on a strong run, gaining 83% over the past year and 15% year-to-date, outpacing the S&P 500's 4% gain.
