Revenue Growth and Profit Challenges
Walmart reported higher-than-expected revenue growth in the fourth quarter of its fiscal year. However, its profit growth forecast for the new fiscal year fell short of market expectations, causing its stock to drop over 5% in early trading.
The company’s quarterly revenue increased by 4%, while U.S. e-commerce sales grew 20%, driven by strong demand for in-store pickup and home delivery services. Despite these positive results, Walmart warned of slower profit growth, disappointing investors.
Fiscal Year Outlook
Walmart expects annual sales growth between 3% and 4%, with adjusted operating income projected to rise between 3.5% and 5.5% on a constant currency basis. The company also noted that its acquisition of smart TV maker Vizio and the impact of the 2024 leap year would reduce growth by 1.5%.
For adjusted earnings per share, Walmart forecasts a range of $2.50 to $2.60, below analysts’ average estimate of $2.76 per share.
Economic and Geopolitical Challenges
Chief Financial Officer John David Rainey stated that consumer spending behavior remains "stable" with no significant shifts in buying patterns. However, he acknowledged ongoing geopolitical uncertainties that could impact business operations.
While about two-thirds of Walmart’s products are made or assembled in the U.S., potential tariffs on imports from Mexico and Canada could raise costs. Rainey emphasized that Walmart would collaborate with suppliers, expand its private-label offerings, and adjust supply chains to mitigate any negative effects.
Financial and Business Performance
Walmart’s fourth-quarter results showed revenue of $180.55 billion, exceeding market expectations of $180.01 billion. Net income stood at $5.25 billion, down from $5.49 billion in the same period last year.
Comparable U.S. store sales grew 4.6%, while Sam’s Club sales rose 6.8%, excluding fuel. Global e-commerce sales increased by 16%, reflecting Walmart’s continued digital transformation.
Investment Growth and New Ventures
Walmart’s advertising, subscription, and logistics businesses saw double-digit growth, improving profit margins. The CFO highlighted that these high-margin sectors, including third-party fulfillment services, are more profitable than traditional retail.
Additionally, Walmart announced a 13% increase in dividends to $0.94 per share, marking its largest hike in over a decade.
Stock Market Performance
Despite the recent decline, Walmart’s stock has surged approximately 83% over the past year, closing at $104.00, outperforming the S&P 500 index’s 4% year-to-date gain.
Future Outlook
As Walmart continues expanding its digital operations and improving efficiency, investors remain focused on global economic factors affecting the company’s performance. While Walmart strengthens its online channels and grows in high-margin sectors, its biggest challenge remains navigating potential disruptions in global supply chains.