Walmart stock drops as it posts Q4 earnings beat, cautious 2025 guidance
Walmart (WMT) posted another strong quarter as inflation-weary shoppers searched for value.
Revenue and adjusted earnings per share came in higher than Wall Street expected in the retailer's fourth quarter and fiscal 2025 results, released on Thursday before the market open. Quarterly revenue increased 5.3% year over year to $182.6 billion, while adjusted earnings per share was up 10% to $0.66.
However, its stock dropped 5% in premarket trading, as Walmart's fiscal 2026 guidance disappointed investors. Prior to earnings, its shares have soared over 75% in the past year, compared to a 23% gain for the S&P 500 (^GSPC) and a 13% drop at rival Target (TGT).
Same-store sales for Walmart US increased 4.6% in the quarter. The growth was boosted by the retailer attracting more higher-income shoppers with its emphasis on value and convenience.
Its sales at Walmart US e-commerce jumped 20% year over year, fueled by in-store pickup and delivery, as well its advertising platform and online marketplace. Strong holiday sales also drove the quarter.
"We have momentum driven by our low prices, a growing assortment, and an eCommerce business driven by faster delivery times," CEO Doug McMillon said in the release, "We're gaining market share, our top line is healthy, and we're in great shape with inventory."
Its subscription service, Walmart+, saw double-digit growth in the quarter, while membership and other income increased 33%.
The retailer's US grocery business, which makes up 60% of total sales, saw mid-single digit same-store sales growth, boosted by increased foot traffic and e-commerce. Discretionary items, like toys, home decor, and fashion, which have been lagging in recent years, saw low single digit growth in the quarter.
For the full year, Walmart surpassed Wall Street's expectations. Net sales increased 5.6% to $684.2 billion.
However, "investors will focus less on the quarter and more on the outlook for 2025, and specifically overlook what we expect to be an initial conservative, and below consensus, guide for the fiscal year," Deutsche Bank analyst Krisztina Katai told clients in a note prior to earnings.
For its fiscal year 2026, the company put forth a conservative guidance, as it has done for the last two years. It projects to increase net sales between 3% to 4%.
"We've been operating in a highly dynamic backdrop for several years, and we expect this year to be no different. Our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions," CFO John David Rainey said on the earnings call.
Here's what Walmart reported for its fourth quarter results versus Bloomberg consensus estimates:
Revenue: $182.6 billion, versus $180.21 billion
Adjusted earnings per share: $0.66, versus $0.65
Walmart US same-store sales growth: 4.6%, versus 4.36%
Foot traffic growth: 2.8%, versus 2.67%
Ticket growth: 1.8%, versus 1.96%
E-commerce sales growth: 2.9%, versus 2.88%
Sam's Club US same-store sales growth: 6.8%, versus 4.99%
Here's what Walmart reported for its fiscal year 2025 results, versus Bloomberg consensus estimates:
Revenue: $684.2, versus $680.70 billion
Adjusted earnings per share: $2.51, versus $2.49
Walmart US same-store sales growth: 4.5%, versus 4.62%
Sam's Club US same-store sales growth: 5.9%, versus 5.35%
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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