By Ananya Mariam Rajesh
(Reuters) – Results from Walmart, a bellwether for the U.S. retail industry, will offer proof on Thursday why the Arkansas behemoth is best placed to navigate the uncertainty from the Trump administration’s tariffs.
Walmart is among a handful of large companies that has not either pulled or slashed its forecast. The company last month reaffirmed its annual forecast, saying “nothing in the current environment changes its strategy”.
Since the announcement was made minutes before U.S. imposed a 145% tariff on China – Walmart’s largest supplier – investors will watch for any adjustment to the outlook and whether it absorbs any tariff-related costs or passes them on to customers.
The world’s largest retailer has promised to keep prices low to keep its price advantage over competitors. Amazon.com, its fiercest rival, is also “maniacally focused” on lower prices and has encouraged sellers to move more inventory to the U.S. before tariffs take effect.
“Many consumers are prioritizing saving money and stretching their dollar a little bit further,” Jefferies analyst Corey Tarlowe said.
“They’re prioritizing what they need over what they want. So they’re trading into value-oriented retailers…that to me paints a very clear picture that’s conducive to success for Walmart.”
With the U.S. and China pausing trade escalations on Monday, retailers including Walmart have had to deal with a month of elevated tariffs. Many stopped shipments from China and reached into their inventories to stock shelves.
Rival Target, unlike Walmart, expects annual sales to be flat and tariffs to weigh on its results. It reports on May 21.
Walmart said in February it expects profit growth to slow this year even as sales rise. It forecast adjusted earnings per share for the fiscal year ending January 2026 in the range of $2.50 to $2.60, and sales growth of 3% to 4%.
At that time, Trump had imposed 10% tariffs on goods from China and 25% on goods from Mexico and Canada.
“Walmart should be able to effectively manage the increase in tariffs, given its strong global sourcing operation, healthy vendor relationships, and defensive product mix,” Telsey Advisory Group analyst Joseph Feldman said.
“Sales should be pretty solid and it feels like investors feel confident that Walmart will execute and operate in this environment.”
Its U.S. e-commerce business will be in focus as the company has said the division will achieve profitability for the first time in the first quarter.
The business has seen double-digit growth for 11 straight quarters in the U.S. and clocked 16% growth globally in the fourth quarter. It accounts for just under a fifth of Walmart’s annual revenue.
The company’s paid membership program, Walmart+, is of interest for investors who want to see if it is taking customers away from rivals Amazon and Costco.
Walmart’s stock has been on a tear over the past year, rising 60% to take its market value above $700 billion, and outperforming six of the so-called Magnificent Seven tech companies that led the market rally in 2023 and 2024. Only Tesla has performed better.
For the first quarter, analysts polled by LSEG expect Walmart net sales to increase 2.7% to $165.88 billion and net income to fall 9% to $4.64 billion.
“(Walmart’s) more favorable positioning relative to the rest of retail will probably become even more evident as the year unfolds, when the operating environment could become much more challenging,” UBS analysts said in a research note.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Additional reporting by Siddharth Cavale in New York; Editing by Sayantani Ghosh and Arun Koyyur)
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