Walmart’s stock faced a significant drop on February 20, 2025, following the retail giant’s fourth-quarter earnings report. Despite reporting solid earnings for Q4, Walmart’s stock fell over 6.8% by mid-morning, putting it on track for its steepest daily loss since November 2023. This decline wiped billions off the fortunes of the Walton family, Walmart’s heirs, and raised investor concerns about the company’s growth prospects in the upcoming fiscal year.
Walmart Earnings: Strong Q4, but Slower Growth Ahead
For the fiscal fourth quarter, Walmart exceeded Wall Street’s expectations with $180.6 billion in revenue and adjusted earnings per share (EPS) of $0.66. These results marked a notable 5.3% year-over-year increase in sales, with a 4.6% rise in same-store sales for its U.S. operations. Walmart’s e-commerce performance was also a highlight, with U.S. online sales jumping by 20% year-over-year, driven by strong holiday sales, increased foot traffic, and growth in its online marketplace.
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Walmart Stock Drops Despite Solid Earnings
However, despite strong Q4 results, Walmart stock price slid dramatically following the retailer’s forecast for fiscal year 2026. The company’s projected growth of 3% to 4% in net sales for the year came in below analyst expectations of approximately 4.1%. Additionally, Walmart’s guidance for full-year earnings per share of $2.50 to $2.60 was significantly lower than the $2.77 analysts had anticipated. This conservative outlook sent a shockwave through the market, as investors had hoped for more aggressive growth prospects.
Earnings breakdown
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 billion, versus $680.7 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%
Tariffs and Geopolitical Uncertainty
A major factor weighing on Walmart’s future outlook is the uncertainty surrounding tariffs, particularly those that could affect imports from Mexico and Canada.
Walmart’s CFO, John David Rainey, acknowledged that while the company is not factoring these potential tariffs into its forecasts, it is not immune to the impact they could have on consumer prices.
With a significant portion of Walmart’s goods coming from overseas, higher tariffs could lead to rising costs, potentially impacting the retailer’s ability to maintain its low-price advantage.
In addition to tariffs, the stronger dollar, especially since the election of former President Donald Trump, is expected to further impact Walmart’s profits. The retailer has already warned that currency exchange rates could hurt profits by about 2% in the coming year
Impact on the Walton Family
The drop in Walmart’s stock price had immediate consequences for the Walton family, who control the company. Alice, Jim, and Rob Walton, the children of Walmart founder Sam Walton, lost nearly $6 billion collectively in net worth due to the stock’s sharp decline.
The Walton heirs are some of the richest individuals globally, but Thursday’s market reaction underscored the volatility that even the largest retailers can face. Overall, Walmart lost approximately $51 billion in market capitalization, with the company’s stock price hovering around the $97 mark.
WMT Earnings and the Future Outlook
While Walmart’s earnings for the past year were impressive, with a record-setting $681 billion in revenue and $20.1 billion in net profit, the retailer’s cautious stance for 2025 has raised some alarms among investors.
Walmart’s stock has performed strongly over the past year, up 66%, and 8% year-to-date, but today’s decline highlights the challenges the company faces in maintaining that growth momentum.
Walmart’s CFO John David Rainey emphasized that the company is prepared to navigate these challenges, focusing on working closely with suppliers and optimizing its supply chain to mitigate the effects of external pressures like tariffs.
As Walmart continues to diversify its revenue streams, from its growing subscription service, Walmart+, to its expanding advertising business, the company is adapting to the evolving retail landscape.
However, with uncertainties around global economic conditions and consumer behavior, Walmart’s cautious outlook for the coming year serves as a reminder of the challenges even the world’s largest retailer must navigate.
Is Walmart Stock a Buy?
Walmart’s Q4 earnings were solid, but its weaker forecast for the fiscal year ahead has raised questions about the sustainability of its growth.
With ongoing concerns about geopolitical tensions, tariffs, and currency fluctuations, investors will need to assess whether Walmart stock can maintain its current trajectory or if these external factors will hinder future growth. As always, potential investors should carefully consider these risks before making any decisions regarding WMT stock.
In the coming months, all eyes will be on Walmart’s ability to adapt to the changing retail landscape and whether it can overcome the challenges posed by rising costs and shifting consumer behavior.
