A Walmart Supercenter in Burbank, California, on Nov. 21, 2024.
Allen J. Schaben | Los Angeles Times | Getty Images
DALLAS — Walmart on Wednesday pulled its outlook for operating income in the first quarter, citing uncertainty about the potential impact of sweeping tariffs on China, Vietnam and other key sources of goods across the globe.
In a news release, the discounter said it wants to “maintain flexibility to invest in price as tariffs are implemented.” It did not provide a new range for first-quarter operating income. It had projected an increase of 0.5% to 2.0% in adjusted operating income in the fiscal first quarter.
Walmart maintained its first-quarter sales outlook of 3% to 4% growth.
The retailer made the move the same day that President Donald Trump’s sharp tariffs took effect on significant manufacturing hubs that produce some of the goods that it carries. The duties began at 12:01 a.m. ET, including an expected 104% tariff on imports from China and a 46% levy on imports from Vietnam.
Yet the long-term fate of the tariffs remains unclear, as Trump sends mixed signals about his willingness to strike deals with some countries to lower the duties. Treasury Secretary Scott Bessent has said some 70 countries have reached out to the White House for talks about the levies.
Walmart’s announcement comes as major U.S. companies start to speak out about the uncertainty the tariffs have created for their businesses. Delta also said bookings have suffered due to the trade war and said it will not expand flying in the second half of the year.
Though it said the uncertainty around tariffs made it hard to predict first-quarter operating income, Walmart stuck by its full-year guidance. The discounter said in February that it expects full-year net sales to grow 3% to 4% and adjusted operating income to increase between 3.5% and 5.5% on a constant currency basis. That includes a 1.5 percentage point headwind from acquiring smart TV company Vizio and from having a leap year in 2024.
The company said in February that it expects full-year adjusted earnings of $2.50 to $2.60 per share, which includes a 5 cent per share headwind from currency.
Along with tariff-related uncertainty, Walmart also blamed pulling the first-quarter operating income guidance on insurance-related costs and a less favorable mix of merchandise. The company’s leaders have spoken frequently about how inflation has made U.S. consumers more value conscious and selective, causing some to buy lower-margin necessities like groceries and household items instead of higher-margin items like clothing.
Walmart in ‘a fluid environment’
Walmart’s announcement came ahead of an investor presentation on Wednesday by the retailer’s top leaders. It is part of a two-day event in Dallas.
In his opening remarks on Tuesday, CEO Doug McMillon acknowledged the strange time that the retail giant found itself in.
“Clearly, our environment has changed, so that makes this really exciting for us,” he said, eliciting a laugh from the room of investors, bankers and reporters.
“We’ve learned how to manage through turbulent periods,” he said. “Especially these last couple of years, it has been one thing after the other.”
“It’s clearly a fluid environment,” he said. “And while we don’t know everything that’s going to happen, of course, 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. We’ll be focused on managing our inventory and our expenses well.”
Source link
This article was complied by AI and NOT reviewed by human. More information can be found in our Terms and Conditions.
