Despite all of the tariff turmoil out of Washington, there were some words of assurance out Bentonville, Ark., hometown of Walmart Inc.
The retail giant — which gets a third of its U.S. inventory from abroad, with China and Mexico counting as its largest sourcing markets — held on to its fiscal outlook despite U.S. President Donald Trump’s trade war with, well, everyone.
Shares of Walmart rose 3.3 percent to $84.44 in Wednesday morning trading on Wall Street, even though imports from China were hit with a staggering 104 percent tariff overnight. The overall market didn’t fare quite as well, with the S&P 500 up 0.2 percent.
With revenues of $681 billion last year, 270 million customers visiting its stores each week and a global supply chain, Walmart is both highly exposed to the tariffs and big and strong enough to maneuver.
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Doug McMillon, president and chief executive officer of Walmart, doubled down on the company’s long-term plans and promises at a previously scheduled meeting in Dallas on Wednesday.
McMillon was also mindful of the moment.
“I want to acknowledge the environment that we’re in and that it’s changing,” he said. “I know many of you are all working through how that might influence the…investment choices you make.
“But I want you to know how confident I remain in our company,” the CEO said. “I’ve seen us navigate times like the period after 9/11, the global financial crisis, the pandemic and, more recently, high inflation. While in the short term, we’re not immune to some of the effects. We are positioned to play offense. Nothing about the current environment impacts our confidence in our business or strategy.”
At its last investor meeting two years ago, Walmart said that its updated business model — leaning more on e-commerce, an omnichannel positioning and new business like digital advertising — would deliver sales growth of about 4 percent, with operating profit growth outpacing sales.
John David Rainey, chief financial officer, reminded investors that since then sales have grown by more than 5 percent and operating income has increased almost 10 percent.
“While the market may be a little nervous about consumer sentiment at this very moment, there’s nothing, nothing that changes our view on our ability to deliver this framework in the coming years,” Rainey said.
Walmart’s version of omnichannel has helped it add more than $150 billion in sales over the past five years without a meaningful increase to its store base.
“We’re getting more out of our stores and clubs than before, and e-comm has contributed 50 percent of that growth,” Rainey said. “We’ve set off this virtuous cycle, investing in the business to drive above-trendline growth, higher incremental margins, which in turn allows us to reinvest back into the business and generate improved financial returns for shareholders. This cycle results in ROI continuing to improve into the future.
“We are truly and uniquely a scaled omnichannel retailer,” he said. “We are one of one.”
And to drive that point home, Rainey revealed that Walmart’s U.S. e-commerce business is trending toward profitability in the current quarter and is expected to be profitable on an annual basis.
“This is a milestone moment for our company and we expect to see the benefits and margins in the future years,” he said.
On almost any other day, that might have been the headline, but Trump’s tariffs are almost all that’s on anyone’s mind, on Wall Street and in retail.
While companies have been poring over every news alert and closely watching the body language from Trump and his inner circle, there has been only the start of a reaction. In part, that’s because the tariff increases — if they stick — are seemingly big enough to break practically any business model in fashion or retail.
And so the fact that Walmart was able to put such a brave face on the situation was reassuring.
“We’re one week into this new tariff environment and we’re still working through what this means for us,” Rainey said. “As a reminder, though, more than two thirds of what we sell in the U.S. is made, grown or assembled in the U.S.
“We want to keep prices low,” he said. “Our team is experienced with managing price over a portfolio of items. We want to manage our inventory well and we want to manage our cost.”
Already, there have been reports that Walmart is trying to get its suppliers on the back end to bear at least some of the cost of the increases.
Meanwhile, Walmart is confronting an increasingly skittish shopper on the front end of its business.
“For the current quarter, the uncertainty and decline in consumer sentiment has led to a little more sales volatility week-to-week and frankly, day-to-day,” Rainey said. “But we still expect [first-quarter] sales to be in the range of guidance of 3 percent to 4 percent growth. Operating income has been harder to predict and we’ve widened our internal range of scenarios.”
Walmart also stood by its sales and operating income growth guidance for the year.
But given that it’s still just April, the company — and retail generally — still has time to hope that the trade war smoke clears before annual numbers are due.
