Walmart still upbeat on income forecast, will ‘manage through’ tariff turmoil

Walmart on Wednesday (April 9) said during its investor conference in Dallas it is holding steady with its sales growth forecast, with execs saying the retail giant will play offense as it focuses on a strategy to grow income faster than sales this year and beyond.

CEO Doug McMillon said in his three decades at Walmart execs have managed through the Sept. 11, 2001 crisis, recessions, a global financial crisis in 2008, a pandemic, and the inflation that followed. He said President Donald Trump’s tariffs and shifting trade policy also will be handled one day at time. The on-again, off-again nature of Trump’s tariff announcements took another turn Wednesday afternoon when he put a 90-day pause on higher tariffs with most countries, but boosted tariffs on China to 125%.

“We’ve learned how to manage through turbulent periods,” McMillion said. “We do know what our priorities are, and we know what our purpose is, and we’ll be focused on keeping prices as low as we can. And we’ll focus on managing our inventory and our expenses well.”

Walmart said in February it expected fiscal year sales to rise between 3% and 4%, with annual adjusted operating income gains between 3.5% and 5.5%. Walmart said its first-quarter sales growth forecast ending April 30 will range between 3% and 4% from a year ago, but the range of outcomes for operating income growth has widened thanks to tariff uncertainty.

McMillon said Walmart will remain flexible with prices and, if necessary, could take lower margins on seasonal items should sales stall. He said there are plenty of levers the company can pull to offset any margin erosion. The levers include advertising revenue, income streams from a growing membership base, data sales business, and a cash flow positive online business for the U.S., which is a milestone achievement considering steep losses in recent years.

“History tells us when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,” said Walmart Chief Financial Officer John David Rainey, adding that Walmart gained new customers during the pandemic.

Rainey outlined Walmart’s growth plan over the next five years. He said the income generated from advertising and data sales is accretive to the business. He said the $150 billion Walmart has added to its revenue in the past couple of years without adding new stores did not happen by accident. He said the Walmart U.S. online business is now profitable, which also adds to cash flow and a growing marketplace that provides an online sales platform for retail entrepreneurs.

“Our newer businesses have momentum, and we expect they will represent 50% of the top-line growth in five years,” Rainey said.

He said the increase in Walmart+ subscriptions continues to grow, pushing digital spending up by 50% over the past year. He said the advertising, financial technology and data businesses have grown 40% over the past five years. He expects that two-thirds of the profit growth over the next five years will come from digital sales.

Walmart execs have said 27% of the retail market is digital, but the investments made in recent years in people and technology are paying off in better inventory flow and management that allows sales in a variety of methods. Also, 90% of store delivery orders are made to Walmart+ subscribers who are also willing to pay extra for faster delivery in one hour ($10) or under three hours ($5).

McMillon also said the people-centric business and technology adoption will be a winning formula. He said execs will speak more to the dynamic operating environment ahead of first quarter earnings results on May 15.

“I like the hand I’m holding and would not want to change with any other retailer,” McMillon said.

Walmart shares (NYSE: WMT) tumbled around 8% over the past week with news of wide-spread reciprocal tariffs that were supposed to go into effect Wednesday. Following Trump’s surprise “pause” announcement, stock markets rebounded. Walmart shares rallied nearly 10% on the pause and the retailer’s upbeat forecast. Shares closed Wednesday at $89.58, up 9.52%. During the past 52 weeks, the share price has ranged between $105.30 and $58.56.