On November 21, 2024, Walmart Supercenter in Burbank, California.
Allen J. Shaven | Los Angeles Times | Getty Images
Dallas – Walmart On Wednesday, it abolished its operating profit outlook in the first quarter, citing uncertainty about the potential impact of tariffs on China, Vietnam and other major commodity sources around the world.
In a news release, the Disc Counter said “we want to maintain flexibility in investing in prices as tariffs are implemented.” It said it expanded its first-quarter operating profit guidance but did not offer a new range projected to have increased 0.5% and 2.0% in the first-quarter adjusted operating profit.
Walmart maintained its first quarter sales outlook, growing from 3% to 4%.
Financial outlook and comments from managers came before President Donald Trump increased tariffs on goods from China to 125% and temporarily reduced import duties from dozens of other countries to 10%. Treasury Secretary Scott Becent said about 70 countries contacted the White House for a talk about taxation.
Walmart shares rose more than 9% on Wednesday after Trump’s announcement.
In an investor presentation on Wednesday, Chief Financial Officer John David Rainey said, “Operating profits are difficult to predict, and given the current context, we have expanded our internal scenario.”
Rainey said Walmart “still works through what this (the new customs environment) means to us.” About two-thirds of what Walmart sells in the US are made, grown and assembled in the US, he said. The third place Walmart imports come from around the world, he said, but China and Mexico are “most important.”
He said this quarter, “the uncertainty and declining consumer sentiment has brought about a bit of weekly and frankly daily sales volatility.”
Sales trends for general products, a category outside the grocery sector, tended to be more profitable and weaker in the quarter, but improved as the period progressed, he said.
“We’re focusing on the long term,” he said. “What history tells us is that when we lean into these times of economic uncertainty, Walmart appears on the other side with a larger share and stronger business.
Walmart’s announcement comes as major US companies began talking about the uncertainty tariffs have created for their businesses. delta He also said bookings are suffering due to the trade war and that flights will not expand later this year.
The uncertainty around tariffs said it made it difficult to forecast operating profit for the first quarter, but Walmart stuck to full-year guidance. Disc Counter said it expects full-year net sales to increase by 3% to 4% in February, and an operating profit of 3.5% to 5.5% on a constant currency basis. This includes a 1.5% point headwind from acquiring smart television company Vizio and spending the leaps year in 2024.
The company said in February it expects annual adjusted revenues of between $2.50 and $2.60 per share, including a five-cent headwind from the currency.
In addition to tariff-related uncertainty, Walmart also denounced its first quarter operating profit guidance on insurance-related costs and less favorable combinations of products. The company’s leaders frequently spoke about inflation that boosts consumers’ more conscious and selective value, and buys lower margin essentials like higher margin items such as food and household items like items like clothing.
Walmart, “Fluid Environment”
The Walmart announcement came before Wednesday’s investor presentation by top retailer leaders. It’s part of a two-day event in Dallas.
In his opening remarks held Tuesday, CEO Doug McMillon acknowledged the strange time when retail giants found themselves.
“Obviously, our environment is changing, so this is really exciting for us,” he said, drawing laughs from the rooms of investors, bankers and reporters.
“We learned how to manage a turbulent era,” he said. “What has it been like over and over the last few years, especially?”
“It’s clearly a fluid environment,” he said. “And we don’t know everything that happens, but of course we know what our priorities are, what our purpose is. We focus on keeping the lowest possible price. We focus on managing our inventory and costs.”
