Walmart warns profit growth will slow, fueling consumer spending pullback fears

Walmart’s well-known slogan—“every day low prices”—might start to look more ironic than iconic, as prices for everyday goods stay doggedly high.

And that might be why shares dipped after the company said it expects profit growth to slow this year, despite strong sales and an otherwise solid earnings report.

Right now, things look good for the retailer. Walmart posted a 20% jump in e-commerce sales for the holiday quarter, and overall revenue climbed 4% to $180.6 billion.

But there could be trouble on the horizon. Revenue and profit targets for fiscal 2026 came in below analyst expectations: The company said net sales would grow 3% to 4%, lower than Wall Street predicted. Walmart anticipates adjusted earnings per share for the fiscal year to be between $2.50 and $2.60, below the $2.76 analysts expected, per LSEG data.

While investors were prepared for a cautious outlook, “this is a more muted outlook than investor feedback into earnings had suggested,” Ivan Holman, a Bernstein analyst, told the Wall Street Journal.

To some, Walmart’s soft guidance signals a potential slowdown in consumer spending.

“At the moment, the labor market is still strong,” Brian Mulberry, a client portfolio manager at Zacks Investment Management, which invests in Walmart, told Reuters, explaining that if Walmart’s guidance was followed by a weakening labor market, “it would be a strong signal that economic growth is slowing.”

Walmart noted that its guidance was intentionally cautious, and not out of line with prior beginning-of-year outlooks. “We have to acknowledge that we are in an uncertain time and we don’t want to get out over our skis here,” CFO John David Rainey said on an analyst call.

Talking to CNBC, he noted there weren’t “any sharp changes” in consumer spending patterns, but acknowledged that “there’s far from certainty in the geopolitical landscape.”

You can say that again.