Walmart’s lower-than-expected guidance may mean consumer spending is slowing

3 weeks ago

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Walmart on Thursday forecast sales and profit for the fiscal year ending January 2026 below Wall Street estimates, suggesting the world’s largest retailer expects inflation-weary consumers to pull back after several quarters of solid growth.

Walmart shares, which had risen about 72% in 2024 and hit a record high of $105 last week, were down 6% in early trading. Shares of rival retailer Target were down 1.6%, with Amazon 0.9% lower.

Walmart forecast adjusted earnings per share for fiscal year 2026 in the range of $2.50 to $2.60, below analysts’ expectations of $2.76, according to LSEG.

Walmart’s lower-than-expected guidance is a warning that U.S. consumer spending is slowing, said Brian Mulberry, client portfolio manager at Zacks Investment Management, a Walmart investor.

“At the moment the labor market is still strong,” he said, adding that if Walmart’s soft guidance is followed by a decline in jobs, “it would be a strong signal that economic growth is slowing.”

A Walmart Supercenter shown in Asheville, North Carolina.

Walmart said annual sales are expected to rise between 3% and 4%. Analysts had expected 4% growth.

The sales outlook includes a 20 basis point impact from the negative effect of an additional day in the leap year of 2024, and a boost of 20 basis points from the acquisition of smart-television manufacturer Vizio, the company said.

As one of the first major U.S. retailers to shed light on the crucial holiday quarter and the current year, Walmart’s forecast hints at how the retailer expects to fare under President Donald Trump’s additional tariffs on goods made in China, and the threat of 25% tariffs on products made in Mexico and Canada.

Despite issuing disappointing guidance, Walmart sees U.S. shoppers as “resilient” and focused on value, Chief Financial Officer John David Rainey said on a post-earnings call.

He said the retailer did not include an assumption of new U.S. tariffs in its guidance, but said Walmart can manage any new duties well, without offering details.

“We’re one month into the year, so I think it’s prudent to have an outlook that is somewhat measured. We don’t want to get ahead of ourselves, there is certainly some unpredictability in any environment that we have, but we feel really good about our ability to navigate that,” Rainey said.

U.S. retail sales experienced their largest monthly decline in two years in January, hampered by frigid temperatures, wildfires, and motor vehicle shortages.

But Walmart appeared to remain unscathed with total U.S. comparable sales rising 4.6% in the fourth quarter, with January being its strongest month for sales, Walmart said. That surpassed analysts’ estimates of a 4.15% increase.