Walmart yanked its economic expectations report for the first quarter, pointing to uncertainty amid widespread tariffs on China, Vietnam, and other sources of imports.
Walmart said in a press release that it aims to “maintain flexibility to invest in price as tariffs are implemented.” Walmart added that it has expanded its operating guidance for the fiscal first quarter, but didn’t share a new range for operating income for the period.
Previously, it projected an increase of 0.5 percent to 2 percent in adjusted operating income for the fiscal first quarter. However, Walmart stuck to its sales outlook for the first quarter of 3 to 4 percent growth.
That news came just hours before President Donald Trump issued a 90-day pause on his high tariffs on more than 70 countries while hiking levies on China to 125 percent and leaving in place a 10 percent baseline levy.
Chief Financial Officer John David Rainey said during an investor presentation on Wednesday that “operating income has been harder to predict and we’ve widened our internal range of scenarios, given the current backdrop,” according to CNBC.
He added that the company is “still working through what this [new tariff environment] means for us.”
Out of all the products it sells in the U.S., as much as two-thirds are made, grown, or assembled in the country, said Rainey. While Walmart gets the last third from across the world, Rainey noted that China and Mexico are the “most significant.”
In the current quarter, Rainey said, “the uncertainty and decline in consumer sentiment has led to a little more sales volatility week to week and frankly, day to day.”
Rainey noted that sales trends in general merchandise were weaker in the quarter but have been improving. General merchandise is a category outside of the grocery department that is usually more profitable.
“We’re focused on the long term,” said Rainey, according to CNBC. “What history tells us is that when we lean into these periods of economic uncertainty, Walmart emerges on the other side with greater share and a stronger business. And we don’t expect this current period to be any different.”
Walmart also said that it was removing its guidance on its income in the first quarter because of costs related to insurance and a less advantageous combination of merchandise.
In his opening remarks at an investor presentation in Dallas on Tuesday, CEO Doug McMillon said, “Clearly, our environment has changed, so that makes this really exciting for us,” to laughter in the room.
“We’ve learned how to manage through turbulent periods,” he added. “Especially these last couple of years, it has been one thing after the other.”
“It’s clearly a fluid environment,” McMillon noted. “And while we don’t know everything that’s going to happen, of course, we do know what our priorities are, and we know what our purpose is, and we’ll be focused on keeping prices as low as we can. We’ll be focused on managing our inventory and our expenses well.”
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