DALLAS — On Wednesday, Walmart rescinded its operating income forecast for the first quarter, citing the unpredictability surrounding new tariffs affecting imports from China, Vietnam, and other critical markets.
The retailer stated in a news release that its goal is to “maintain flexibility to invest in price as tariffs are implemented,” refraining from issuing a revised outlook for first-quarter operating income. Previously, Walmart had estimated an increase of 0.5% to 2.0% in adjusted operating income for the fiscal first quarter.
This announcement coincided with the implementation of President Donald Trump’s substantial tariffs on major manufacturing sectors that produce goods stocked by Walmart. These tariffs, which went into effect at 12:01 a.m. ET, include a staggering 104% on imports from China and a 46% tariff on goods from Vietnam.
The fate of these tariffs remains uncertain, as the Trump administration sends conflicting signals regarding negotiations with certain nations to potentially reduce the levies. Treasury Secretary Scott Bessent disclosed that around 70 countries have approached the White House to discuss the tariffs.
Walmart’s decision reflects broader concerns among major U.S. corporations about the volatility created by these tariffs. For instance, Delta indicated that its bookings have declined due to the ongoing trade war, and the airline has paused plans to expand its flying schedule for the latter half of the year.
Despite the uncertainty regarding first-quarter operating income, Walmart maintained its full-year guidance. In February, the company projected an annual net sales increase of 3% to 4%, with adjusted operating income expected to rise between 3.5% and 5.5% on a constant currency basis. This forecast includes a 1.5 percentage point impact from the recent acquisition of smart TV manufacturer Vizio and the upcoming leap year in 2024.
The company also indicated that its expectations for adjusted earnings are set between $2.50 and $2.60 per share, which accounts for a 5-cent headwind due to currency fluctuations.
Walmart attributed the withdrawal of its first-quarter operating income forecast not only to tariff-related uncertainties but also to rising insurance costs and a less favorable merchandise mix. Company executives have noted that inflation has altered consumer behavior in the U.S., leading shoppers to prioritize lower-margin essentials such as groceries and household goods over higher-margin products like clothing.
Walmart in ‘a fluid environment’
The timing of Walmart’s announcement coincided with an investor presentation by the retailer’s senior management in Dallas.
In his opening remarks on Tuesday, CEO Doug McMillon acknowledged the unique challenges facing the retail sector.
“Clearly, our environment has changed, making this an exciting time for us,” he remarked, prompting laughter among investors, bankers, and journalists in attendance.
“We have learned to navigate turbulent times,” he stated, reflecting on the series of challenges over the past couple of years.
“This is undoubtedly a fluid environment,” McMillon said. “While we cannot predict all future developments, we are clear on our priorities and purpose. Our focus will remain on keeping prices as low as possible, effective inventory management, and careful expense oversight.”
