Walmart executives have warned of the challenges tariffs will present as cost-conscious customers contend with higher prices.
The executives said that Walmart customers focus more on getting the lowest price than whether a product is made in the US, Canada, China or elsewhere.
When Walmart reveals its results on Thursday, the chain of more than 4,600 US stores is likely to show that it rang up record annual sales, according to the London Stock Exchange Group (LSEG).
Walmart revenue rose by roughly 5% to $680.47 billion for the year ending 31 January 2025, according to LSEG’s estimates ahead of official results.
However, some investors worry is bargain-price-above-all approach leaves the retailer in a bind under US President Donald Trump as he introduces new tariffs on goods made in China and threatens them on products made in India, Mexico and Canada.
Walmart is among the first big US retailers to report results for the fourth quarter, including holiday season sales.
The retailer serves as a barometer for consumer spending due to its scale and commanding market share of the US retail industry.
Investors watch its earnings closely for hints about US economic health.
Also the largest US importer of containerised goods, Walmart generates 40% of its sales from discretionary merchandise like clothing, electronics and toys – items sourced primarily from China, India and other nations targeted by Trump’s new tariffs.
‘Adverse Effect’
For the current year, Wall Street analysts expect Walmart’s revenue growth rate to slow to 4%, hinting at anxiety over tariffs.
A Walmart spokesperson declined to comment, saying the company was in its quiet period ahead of the earnings report.
Brian Mulberry, client portfolio manager at Zacks Investment Management – a Walmart investor – said he will look at Walmart’s Great Value in-house brand as a yardstick to measure the impact of tariffs.
Mulberry noted that China is the source of over 70% of the household and generic non-food products that Great Value sells such as electronics, accessories, plastic food containers and sporting goods.
He said, “We will be watching for any pressure on margins on the Great Value and other in-house brands as they have been responsible for adding positive growth to bottom line margins.”
In an annual filing in April 2024, Walmart warned, “Significant changes in tax and trade policies, including tariffs and government regulations affecting trade between the US and other countries where we source many of the products we sell in our stores and clubs could have an adverse effect on our business and financial performance.”
Walmart Moves
Walmart has maintained its profit margins by reducing reliance on China, increasing warehouse automation and relocating white-collar jobs to lower-cost areas such as Arkansas.
The retailer has also committed to invest $350 billion over 10 years to source products from suppliers that make grow or assemble in the US to help it save costs by shortening lead times and keeping shelves better stocked.
Its current-year sales growth forecast of 4% growth exceeds that of rival Target, which sources much of its inventory internationally, with China being its largest source, S&P analysts wrote in a note.
LSEG estimates indicate that total annual revenue for Target – which reports holiday quarter results on 4 March – will decline about 1% in 2024 and rise by 2.5% in 2025.
UBS analyst Michael Lasser – who last week raised his price target on Walmart’s stock to $113 from $100 – said that while Trump’s election boosted inflationary pressures with new tariffs and immigration policies, Walmart’s everyday low-price strategy would likely drive shoppers to spend more there.
Lasser said, “We believe Walmart would be one of the better positioned retailers to mitigate or manage through tariffs, given its price leadership, buying power, and global sourcing capabilities.”
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