For the First Time in Three Years, Walmart Forecasts Lower Earnings

Walmart Inc. shares experienced a sharp decline in early Thursday trading, heading toward their worst day in nearly three years. This drop followed the retail giant’s release of lackluster earnings forecasts for both the current quarter and the full fiscal year.

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In a statement, Walmart explained that its projections were based on expectations of a “generally stable consumer” while continuing to face challenges related to its product mix and store formats across global markets.

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Despite surpassing estimates for profit, revenue, and same-store sales in the fiscal fourth quarter ending in January, as well as announcing a 13% increase in its dividend, Walmart’s downbeat guidance weighed heavily on investor sentiment.

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Shares of Walmart (WMT) fell 8.1% in premarket trading, making it the biggest decliner in the S&P 500 index (SPX) ahead of the market’s open. This sharp selloff came just four days after the stock reached an all-time high and positioned it for its worst single-day performance since May 17, 2022, when it plummeted 11.4%.

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For the first quarter, Walmart projected adjusted earnings per share (EPS) between 57 cents and 58 cents, a drop from 60 cents a year earlier and below analysts' expectations of 64 cents, according to FactSet. If realized, this would mark the first year-over-year decline in quarterly adjusted EPS since the quarter ending April 2022, which was reported on May 17 of that year.

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The retailer expects sales to grow between 3% and 4% year-over-year, while analysts had been projecting net sales growth of 4.6% to reach $165.4 billion.

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Looking ahead to fiscal 2026, Walmart anticipates adjusted EPS in the range of $2.50 to $2.60, roughly in line with fiscal 2025 EPS of $2.51 but falling short of the current FactSet consensus of $2.77.

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Annual net sales are forecasted to rise by 3% to 4%, implying a range of $694.7 billion to $701.5 billion, slightly below analysts' average estimate of $702 billion.

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For the fiscal fourth quarter, which ended January 31, Walmart reported net income of $5.25 billion, or 65 cents per share, down from $5.49 billion, or 68 cents per share, in the same period last year.

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When excluding nonrecurring items, such as unrealized losses on investments, adjusted EPS increased to 66 cents from 60 cents, slightly ahead of the FactSet consensus of 65 cents.

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Revenue climbed 4.1% to $180.55 billion, including net sales of $178.83 billion, which represented a 4% increase from the previous year. These figures narrowly exceeded analysts' estimates of $178.71 billion in net sales and $180.19 billion in total revenue.

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Walmart’s U.S. operations saw net sales rise by 5% to $123.5 billion, outperforming expectations of $122.95 billion. Same-store sales, which track the performance of stores open for at least a year, climbed 4.6%, also beating estimates of a 4.4% gain.

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Sam’s Club, Walmart’s membership-based warehouse division, posted a strong 6.8% increase in comparable sales, well above projections of 5% growth. This boost was driven by a 5.4% increase in the number of transactions and a 1.3% rise in the average ticket size.

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Separately, Walmart announced an increase in its annual dividend, raising it from 83 cents per share to 94 cents per share. The first quarterly payment at the new rate of 23.5 cents per share will be distributed on April 7 to shareholders of record as of March 21.

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Based on Wednesday’s closing stock price, the new dividend equates to a 0.90% yield. This is lower than Target Corp.’s (TGT) current dividend yield of 3.43% and below the implied S&P 500 yield of 1.24%.

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Despite Thursday’s sharp pullback, Walmart’s stock had gained 19.3% over the past three months, significantly outperforming Target’s 7.4% increase and the S&P 500’s 3.8% advance over the same period.

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