Walmart’s (WMT) CFO is looking to assuage fear among investors that 2025 won’t be as strong as in recent years.
“They’re conflating our guidance with … maybe suggesting that we’re feeling like things aren’t as good, or the economy is softer,” John David Rainey told Yahoo Finance over the phone. “Let me be very clear: That’s not the case. We feel really good about how we’re doing.”
Shares of the retail giant sank more than 6% in trading on Thursday after it put forth conservative 2026 fiscal year guidance, which it has done for the past two years. It projects net sales to increase between 3% and 4%, in line with a target of 4% annual sales growth it laid out years ago.
However, the guidance missed Wall Street estimates of up to 4.2%. It’s also below its 2025 pace, where sales grew 5.6% to $684.2 billion.
As of 12:36:28 PM EST. Market Open.
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Rainey said the company has performed well in January, but with uncertainty regarding tariffs and the macro environment, the team has taken a “kind of prudent approach at this point.”
The retailer also won’t benefit from the same inflationary boost to its top line as it did the past several years, per Rainey. Overall, “there’s nothing to read in between the lines here about some concern on the economy or our business,” he added.
Shares of Costco (COST), Dollar General (DG), Dollar Tree (DLTR), and Target (TGT) are also falling on the news Thursday.
Joe Feldman of Telsey Advisory Group told Yahoo Finance “expectations were running high into Walmart’s earnings report, so despite strong fourth quarter results, they may have fallen short, and the profit guidance for the coming year was below as well.”
But the company still “sounded quite solid” and “newer businesses are growing rapidly and contributing to profits,” Feldman said.
Sales at Walmart US Marketplace grew 34% in the quarter, while Walmart Connect advertising jumped 24%.
TD Cowen analyst Oliver Chen noted that “the big story here is the P/E multiples are very high,” which raises expectations of growth. Walmart is currently trading at a forward P/E of 38 times, compared to a three-year average of 24 times.
Despite the stock drop, “we’re encouraged that this is conservative and in line with the past in terms of how Walmart guides, and this was a solid quarter, a very stable consumer,” Chen added.
D.A. Davidson analyst Michael Baker told Yahoo Finance the dip is a good buying opportunity as the stock still has room to run this year.
