A Walmart Supercenter in Burbank, California, on Nov. 21, 2024.
Allen J. Schaben | Los Angeles Times | Getty Images
DALLAS — Walmart on Wednesday scrapped 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 said it widened the operating income guidance for the fiscal first quarter, but did not provide a new range 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 financial outlook and comments from executives came before President Donald Trump increased tariffs on goods from China to 125% and temporarily reduced duties on imports from dozens of other countries to 10%. Treasury Secretary Scott Bessent has said some 70 countries have reached out to the White House for talks about the levies.
Walmart shares climbed more than 9% on Wednesday following Trump’s announcement.
In an investor presentation on Wednesday, Chief Financial Officer John David Rainey said “operating income has been harder to predict and we’ve widened our internal range of scenarios, given the current backdrop.”
Rainey said Walmart is “still working through what this [new tariff environment] means for us.” About two-thirds of what Walmart sells in the U.S. is made, grown or assembled in the U.S., he said. The third that Walmart imports comes from across the globe, he said, but China and Mexico are the “most significant.”
He said in the current quarter, “the uncertainty and decline in consumer sentiment has led to a little more sales volatility week to week and frankly, day to day.”
Sales trends with general merchandise, a category outside of the grocery department that tends to be more profitable, were weaker in the quarter but have improved as the period has gone on, he said.
“We’re focused on the long term,” he said. “What history tells us is that when we lean into these periods of economic uncertainty, Walmart emerges on the other side with greater share and a stronger business. And we don’t expect this current period to be any different.”
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…