Walmart — America’s biggest retailer and a key economic bellwether — today issued a gloomy outlook for 2025, and Wall Street is worrying
Despite solid sales growth to close out 2024, the retail giant warned profits will likely shrink in 2025 — something not seen since the pandemic
Bosses pointed to fears that inflation-weary Americans will cut back spending, while under President Donald Trump will drive up costs.
The gloomy forecast triggered a broad stock selloff that pulled all three major US stock indexes into negative territory by the time markets closed at 4pm in New York.
The blue-chip Dow suffered the steepest loss, shedding 1 percent. The S&P 500 snapped its two-day string of record closing highs. Walmart itself was down 6.5 percent.
Gold prices, often seen as a safe-haven asset, surged to a record high amid growing economic uncertainty.
‘With the consumer driving 70 percent of the U.S. economy, Walmart’s weak guidance gave rise to some nervousness [about] potential consumer spending going forward,’ said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Walmart expects sales growth of three to four percent in the year ahead. That pales in comparison to last year’s 9.7 percent growth. Full-year profits are also expected to fall.
The Dow Jones dropped today
Doug McMillon, Walmart’s CEO, has led the company through several years of impressive growth – but investors are worried after the company said profits might slow
‘We have to acknowledge that we are in an uncertain time and we don’t want to get out over our skis here,’ Walmart’s CFO, John David Rainey, said during the company’s earnings call on Thursday morning.
‘There’s a lot of the year to play out.’
Still, analysts believe Walmart remains in a strong position of growth, despite the tempered 2025 prediction.
‘The outlook for Walmart remains solid,’ Neil Saunders, the managing director of GlobalData, said after the earnings.
‘While some may be disappointed with the 3 to 4 percent sales growth guidance, we believe this is a solid forecast which continues to build on a very successful period of expansion.’
Even with the one-day drop, Walmart remains well above water on its stock price. The discount retailer has seen an over 80 percent increase in stock in the past year.
Walmart was reporting results for the October to December holiday period, and also updating investors on the outlook for 2025.
Executives said the company has continued to bring in consumers because of its lower prices. But managers still said there are unpredictable headwinds in the future.
Walmart praised its ability to deliver low-priced goods to customers – they said it drove a record amount of ecommerce traffic in 2024
Investors are worried that any slight Walmart stumble might indicate a deeper issue lurking in the U.S. economy
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‘We can’t predict what will happen in the future, but we can manage it really well,’ the company’s CEO, Doug McMillon, said on the earnings call.
‘We’re wired to try and save people money.’
Walmart’s Wall Street scrutiny
Walmart is the nation’s largest grocer, and sells to nearly 230 million customers weekly.
The company’s scale puts Walmart on a unique pedestal: investors view Walmart’s sales as a potential indicator of overall economic stability.
Sticky inflation, potential trade wars, and lower-than-expected January consumer spending has burbled beneath the surface for traders, sending some stocks into slight downfalls.
Both the NASDAQ and S&P500 are down nearly three-quarters of a percentage point after Walmart’s warnings set off fresh questions about the stability of US consumer spending.
Investors have started to worry as other companies also reported a sluggish start to 2025.
Retail and food services sales fell 0.9 percent in the first month of the new year.
Chains have said they noticed a downturn in traffic. Burger King and Popeyes both reported fewer sales in the first month.
But more optimistic investors have cautioned against looking too far into the first-month sales.
Americans tend to spend less in January after going through holiday sales. Plus, the country began recovering from catastrophic natural disasters in California and the American Southeast during the month.