As a result, Walmart has chosen to pull its operating income guidance for the current quarter. The company pointed to the uncertainty around the Trump administration’s tariffs as driving this decision. The world’s largest retailer can no longer forecast its operating income for the current first quarter. Tariffs are upending its supply chain and making life difficult for the multi-national company.
Nonetheless, the retailer has confirmed its full-year guidance, expecting net sales to grow 3% to 4%. Despite the headwinds of the past year, Walmart’s leadership is surprisingly bullish, projecting adjusted operating income growth of 3.5%-5.5% on a constant currency basis going forward. Walmart has been holding investor days like this one in preparation for Wednesday. The company has committed to providing stakeholders with an accurate and timely picture of its financial outlook, even amidst today’s challenging circumstances.
As his opening CEO Doug McMillon pointed out, these are extremely unique times in which the company finds itself. At the same time, he admitted the primary, damaging impact of tariffs on imports. Obviously, a lot has changed in our world,” he remarked. That’s what makes this especially exciting for us. The tariffs are starting to hurt important manufacturing centers that produce goods Walmart sells. This layer of granularity adds challenges to future forecasting.
Walmart has suspended its quarterly guidance, but it continues to stand by its full-year adjusted earnings outlook. The firm expects earnings for $2.50-$2.60/share. Importantly, this includes a 5 cent per share headwind from currency headwinds. The company’s leadership has been monitoring tariff developments closely. Specifically, they’re concerned about the yet-to-be-implemented 104% tariff on imports from China and the expected 46% tariff on imports from Vietnam.
The long-term fate of these tariffs is unclear. From the beginning, President Donald Trump has been ambiguous at best about negotiating bilaterally with countries. These negotiations have real promise to result in mutually agreed reductions of duties. This month-to-month uncertainty adds even more complexity for Walmart as they operate in a new, more fragile economic environment.
You didn’t hear Walmart wavering on its first-quarter same-store sales outlook. They’re forecasting expansion of 3% to 4%. This unbroken guidance would seem to indicate the company’s surety in their ability to pivot to changing market appetites yet still deliver long-term, stable growth.
Walmart’s commitment to putting its customers’ needs first in everything it does will continue to drive the company forward. The company is pursuing solutions to the complications that have been introduced by outside forces such as tariffs and currency exchange rates.