Walmart’s slow growth projection fuels US consumer spending worries

Walmart said its profits will slow for the current fiscal year as inflation tightens buyers’ pursestrings, increasing uneasiness among consumers.

Shares of the world’s largest retailer tumbled over 6% on Thursday over the company’s revelation.

Markets reacted to the retailer’s news, and the Dow slipped 1%, the Nasdaq fell 0.5%, and the S&P 500 dipped 0.4%.

Walmart’s forecast is a sign of fading US consumer optimism amid high prices and the president’s new tariffs.

The company expects sales to grow 3% to 4% this fiscal year, which is below Wall Street’s expectations and under the 5.1% growth it recorded last year. It also said operating income could rise 3.5% to 5.5%, factoring in costs from acquiring Vizio and the extra leap year day.

The Q4 net income declined to $5.25 billion from $5.49 billion a year ago.

CFO John David Rainey warned of geopolitical uncertainty and the potential impacts of tariffs on consumers. Though nearly two-thirds of Walmart’s production is in the US, it still imports from Canada and Mexico. He said the retailer could see an impact if levies on the two countries take effect.

Walmart’s growth and outlook are closely watched by analysts and used as a measure to gauge US consumer health.

Business is still booming
Its ecommerce sales in the US during the holiday quarter shot up 20%, hiking the revenue by 4%.

Walmart US CEO John Furner said on an earnings call that its express deliveries—especially pharmacy orders—which tend to cost an additional $10, are boosting e-commerce profitability.

Apart from retail, Walmart’s advertising and third-party marketplace sales showed strong growth. Its membership income rose 16%, and its global ad business jumped 29%.