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Investing.com - Walmart (NYSE:WMT) has unveiled an outlook for sales in its 2026 fiscal year that was below forecasts, in a potential sign that the big-box retailer may feel the impact of fading optimism among inflation-hit consumers.
Shares in Walmart sank by more than 6% in U.S. trading on Thursday following the report. Prior to the opening bell on Wall Street, the stock had risen by 15.6% so far this year.
Analysts have widely viewed the ubiquitous chain that offers everything from retail goods to groceries as a possible bellwether for the state of the U.S. consumer during the early months of 2025.
Recent economic data has shown a decline in monthly retail sales, while a consumer sentiment survey for February unexpectedly declined. The figures, along with a hotter-than-expected inflation reading for January, suggested that shoppers may be wary of the effect U.S. President Donald Trump’s policy moves -- particularly plans to roll out sweeping tariffs -- could be having on their purchasing power.
Arkansas-based Walmart said it expects annual consolidated net sales to increase in the range of 3% to 4%, versus analyst projections of a 4% uptick, according to LSEG data cited by Reuters. The guidance accounts for a headwind from a lapping leap year in 2024, Walmart said.
For the current quarter, the firm also sees adjusted per-share income at $0.57 to $0.58, short of Wall Street estimates, with Walmart flagging negative currency effects. Sales are tipped to expand by 3% to 4% during the period.
Still, Walmart appeared to weather the hit to retail sales from inclement weather and natural disasters last month, as well as a surge in egg prices that pushed up grocery costs. Total (EPA:TTEF) U.S. comparable sales, excluding gasoline, expanded by 4.9% in the January quarter, compared to expectations for a jump of 4.15%, thanks to strong holiday-season shopping activity and solid demand for GLP-1 obesity drugs. Adjusted earnings per share came in at $0.66. Analysts had seen the number at $0.65.
"We have momentum driven by our low prices, a growing assortment, and an e-commerce business driven by faster delivery times," CEO Doug McMillon said in a statement.
McMillon added that the company is "gaining market share," noting that its top-line returns are "healthy" and its inventory is "in great shape."
In a note to clients, analysts at DA Davidson said Walmart has a "track record" of delivering better-than-anticipated results, then providing -- and subsequently topping -- conservative guidance for the next quarter. The company has also previously given an initial full-year outlook that "ends up being beatable," the analysts led by Michael Baker wrote.
"Thus, we are not overly concerned with the guidance, and to us, the bottom line is that [Walmart]’s business trends remain strong," the analysts said.
Elsewhere, JP Morgan analyst Christopher Horvers called the results for the quarterly "solid" but noted investors are "on edge" about the post-holiday slowdown and the comp shortfall "touches a high anxiety point." That said, the analyst thinks the stock will get defended and said investors should use the pullback to "level up on a still strong long-term story."
(Scott Kanowsky contributed to this article)