Walmart (WMT) had strong sales during the holiday season. But before the stock market opened on Thursday, its shares dropped a lot. The company did not meet its goals for the year. Walmart said that people might spend less money because the economy looks cloudy. Even though Walmart uses its “everyday low prices” slogan, it seems that shoppers are getting tired of low prices.
Walmart now thinks its net sales will grow by 3% to 4% this year. Analysts expected a 4% rise. Because the economy is not sure, Walmart is careful with its plans. Egg prices are a sign of rising costs. The U.S. Department of Agriculture said that wholesale egg prices went up by $0.40 in the last 30 days. This means it costs about $7.44 for a dozen eggs for distributors. Also, from 2020 to 2024, food prices in the United States went up by 23.6%. In January, food prices were 2.5% higher than last year. The U.S. Bureau of Labor Statistics showed that headline inflation rose by 0.5% from one month to the next.
Rising food prices are not new for U.S. consumers. However, there is worry that tariffs from President Trump may make prices go up even more. Even the Federal Reserve was troubled by the risk of tariffs and trade wars, as noted in the FOMC meeting minutes.
Even though the warning about slow growth was not a big surprise, it hid some good numbers from Walmart. As a result, WMT stock fell more than 8% before the market opened, wiping out some of the 77% gain seen over the last year.
Guidance Undermines a Solid Quarter
In the fourth quarter of fiscal year 2025, Walmart earned a total revenue of $180.6 billion, which was a 4.1% increase. This met Wall Street’s high expectations. The company had an operating income of $0.6 billion (or 8.3%). Adjusted earnings per share (EPS) were $0.66, which is a 10% rise from the same period last year and close to what analysts expected.
Walmart’s U.S. e-commerce sales grew by 20% compared to last year, and its global online sales grew by 16%. The advertising business grew by 29%. Also, U.S. same-store sales went up by 4.6%, which is better than the 4.1% forecast by Wall Street.
For fiscal year 2026, Walmart’s guidance was lower than expected. The company said its adjusted earnings would be between $2.50 and $2.60 per share, which is less than the expected $2.76 per share.
Walmart’s subscription service, Walmart+, showed strong growth too. Membership and other income grew by 33%, which is a double-digit increase.
Walmart said, “Our team finished the year with strong results. We did well with our low prices, a wide range of products, and an online store that delivers quickly. We are gaining more customers, our sales are healthy, and our inventory is in good shape.” This simple message shows that the company is proud of its hard work.
For the full year, Walmart’s net sales grew by 5.6% to $684.2 billion. This beat its own guidance of 4.8% to 5.1% growth.
Is WMT a Good Stock to Buy?
Wall Street experts mostly think WMT is a good stock. They gave Walmart a Strong Buy rating, with 23 analysts rating it as Buy and one as Hold. The average price target is $112.30. This target shows there could be about an 8% gain ahead of the next WMT Earnings update. However, these numbers may change over time.