What: Walmart shares drop 6% despite strong holiday quarter results as conservative 2025 guidance and potential tariff impacts worry investors.

Why it is important: The contrast between robust performance and cautious guidance reveals how geopolitical uncertainties can impact retail strategy, even for market leaders.

Walmart reported strong fourth-quarter results with revenue rising 4% and U.S. e-commerce sales growing 20%, driven by store pickup, home deliveries, and gains with upper-income shoppers. However, shares fell over 6% as the company provided conservative guidance for fiscal 2025, projecting 3-4% net sales growth and 3.5-5.5% adjusted operating income growth. The outlook includes a 1.5 percentage point impact from the Vizio acquisition and leap year effect. Management cited geopolitical uncertainties and potential tariffs on imports from Mexico and Canada as key concerns, though noting that about two-thirds of products are made, grown, or assembled in the U.S. The company's newer revenue streams, including advertising and marketplace services, continue showing strong growth and higher margins.

IADS Notes: Walmart's financial results reflect its ongoing transformation into a tech-retail leader. February 2024's achievement of USD 100 billion in e-commerce sales demonstrates digital success, while February 2025's data shows successful evolution into a tech-retail powerhouse. The company's success in attracting affluent shoppers and achieving its best market performance since 1998 validates its strategic direction. June 2024's growth in retail media business shows successful revenue diversification. However, the conservative guidance for 2025, despite strong Q4 results, suggests a measured approach to managing expectation amid geopolitical uncertainties and potential tariff impacts.

Walmart shares drop as retailer says profit growth will slow