Walmart warns of a slower 2025. That's a bad sign for America's economy
Shoppers flooded to Walmart for groceries and clothing last year. But 2025 will be trickier for the retail giant as inflation ticks back up and Trump's tariffs kick in.
Walmart said Thursday that its sales and profit growth will slow this year. The forecast sent its stock tumbling as much as 8% during pre-market trading.
Walmart said sales will grow by up to 4% this year and profit will grow up to 5.5%. But that was short of investor expectations.
Walmart (WMT) is the largest retailer in the United States and a bellwether for consumer spending. Its projected slowdown is a signal for the rest of the retail industry that 2025 will be a rockier year.
David Silverman, a senior director at Fitch Ratings, expects 'retail choppiness to continue in 2025,' given a recent dip in consumer sentiment, particularly for lower-end consumers and tariffs, he said in a note to clients Thursday.
To be sure, Walmart's business is strong and consumers are 'resilient,' the company said. But it acknowledged it will have to navigate tariffs and manage other challenges.
Walmart's outlook 'assumes a relatively stable macroeconomic environment' but 'acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions,' Walmart finance chief John David Rainey said on a call with analysts.
Walmart will be able to handle tariffs better than most companies because it can apply its size and scale to muscle down prices with suppliers. Smaller companies have less leverage and may have to raise prices for consumers, economists say.
Still, in an interview with CNBC, Rainey said Walmart 'is not going to be completely immune' from tariffs.
Americans are showing signs of concern about the economy. Most adults nationwide, 62%, feel President Donald Trump has not gone far enough in trying to reduce the price of everyday goods, according to new CNN polling.
Consumer prices rose 0.5% last month from December — the fastest pace in more than a year — as energy and food costs continued to bite. Egg prices have soared as a result of a deadly avian flu.
Walmart said that it expects normal inflation this year of 1% to 2%, despite the rise in egg prices.
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