Walmart, the largest retailer in the United States, said on Thursday that strong holiday sales propelled its revenue to another annual record but flagged a weaker-than-expected forecast for growth this year, as shoppers face challenges like stubborn inflation, the uncertain impact of tariffs and a potential rise in unemployment.
Walmart said sales rose to $681 billion in its latest fiscal year, which runs through January, a 5.1 percent increase from the year before. The retailer’s annual profit jumped faster than sales, to around $20 billion.
The crucial holiday shopping season was a strong one for the retailer, with more people visiting stores and shopping online last quarter, and spending more on each visit. E-commerce sales jumped 20 percent in the quarter.
“We’re gaining market share, our top line is healthy, and we’re in great shape with inventory,” Doug McMillon, Walmart’s chief executive, said in a statement.
But looking ahead, the company said that it expected revenue to increase 3 to 4 percent this year. That was a little lighter than analysts expected, and Walmart’s stock dropped about 8 percent in premarket trading.
As it has said for the past few years, higher-income shoppers, which Walmart defines as those making more than $100,000, helped the retailer gain market share. These consumers are better able to absorb higher prices, as inflation has recently ticked up. Walmart called out soaring egg prices as a major factor pushing prices higher in recent months.
Walmart said its inventory levels increased 3 percent last quarter. In response to President Trump’s threat of tariffs, analysts have expected retailers like Walmart would order more goods from China and elsewhere to get ahead of the levies.
“The biggest challenge on the horizon for Walmart and everybody else is how the tariffs picture clears up,” said Sheraz Mian, director of research at Zacks Investment Research.
In November, Walmart sought to allay concerns on Wall Street about its exposure to tariffs by saying that about two-thirds of the merchandise it sells comes from the United States. This is, in part, because of Walmart’s large grocery business.
Still, Walmart’s finance chief, John David Rainey, said in an interview at the time that the company expected that if new tariffs were imposed, those would be inflationary for customers.
Lower-income shoppers have less flexibility in their budgets to absorb higher prices. Despite the company increasingly attracting wealthier shoppers, its customer base still largely skews toward those with lower incomes.
The decline in Walmart’s shares on Thursday put a dent in the strength of the stock, which over the past 12 months has jumped more than 70 percent, greatly outperforming the broader market as well as competitors like Amazon and Target.
“The stock has literally been received as if it was one of these highflier tech stocks — so very strong momentum,” Mr. Mian said. “The question has always been, when does that trend slow down and when does the stress and pressure of its lower-income customers start showing up in results?” he added.
