Walmart faces some tariff challenges as Wall Street awaits record-breaking sales

By Siddharth Cavale

NEW YORK (Reuters) - Penny-pinching Walmart shoppers focus much more on getting the lowest prices than on whether products are made in the U.S., Canada, China or elsewhere, Walmart executives have said.

When Walmart discloses results on Thursday, the chain of more than 4,600 U.S. stores is likely to show that it rang up record annual sales, according to LSEG estimates.

Walmart revenue rose by roughly 5% to $680.47 billion for the year ending January 31, 2025, according to LSEG estimates ahead of the results.

But some Walmart investors worry its bargain-price-above-all approach leaves the retailer in a bind under President Donald Trump as he slaps new tariffs on goods made in China and threatens them on products made in India, Mexico and Canada.

Walmart is among the first big U.S. retailers to report results for the fourth quarter, including holiday season sales.

The retailer serves as a barometer for consumer spending due to its scale and commanding market share of the U.S. retail industry. Investors watch its earnings closely for hints about U.S. economic health.

Also the largest U.S. importer of containerized goods, Walmart generates 40% of its sales from discretionary merchandise like clothing, electronics and toys, items sourced primarily from China, India and other nations targeted by Trump's new tariffs.

For the current year, Wall Street analysts expect Walmart's revenue growth rate to slow to 4%, hinting at anxiety over tariffs.

A Walmart spokesperson declined to comment, saying the company was in its quiet period ahead of its earnings report.

Brian Mulberry, client portfolio manager at Zacks Investment Management, a Walmart investor, said he will look at Walmart's Great Value in-house brand as a yardstick to measure the impact of tariffs. Mulberry noted that China is the source of over 70% of the household and generic non-food products that Great Value sells such as electronics, accessories, plastic food containers and sporting goods.

"We will be watching for any pressure on margins on the Great Value and other in-house brands as they have been responsible for adding positive growth to bottom line margins," Mulberry said.

In an annual filing in April 2024, Walmart warned: "Significant changes in tax and trade policies, including tariffs and government regulations affecting trade between the U.S. and other countries where we source many of the products we sell in our stores and clubs could have an adverse effect on our business and financial performance."

Investors such as Randy Hare, director of research at Huntington Private Bank, a Walmart investor, are concerned whether results will show this "adverse effect" on its business.