Walmart Set For Record Sales Amid Tariff Concerns: 'One Of The Better-Positioned Retailers To Mitigate Or Manage Through Tariffs', Says Analyst

As Walmart Inc. WMT gears up to announce its annual results on Feb 20, Wall Street anticipates record-breaking sales. However, the potential impact of new tariffs on the retail giant’s operations can be a cause of concern.

What Happened: Walmart is on track to disclose record annual sales for its over 4,600 U.S. stores. The LSEG’s estimates indicate a revenue increase of approximately 5% to $680.47 billion for the fiscal ending January 31, reported Reuters on Wednesday.

Despite the encouraging sales forecast, there are concerns among investors about the retailer’s exposure to new tariffs introduced by President Donald Trump on goods produced in China, India, Mexico, and Canada. Walmart, which is known for its emphasis on low prices, sources a significant amount of its products from these countries. According to U.S. Customs data released on Feb 1, Walmart was among other U.S. companies that had been consistently accumulating supplies ahead of Trump’s tariff imposition.

With 40% of its sales derived from discretionary merchandise such as clothing, electronics, and toys, the effect of these tariffs could be significant for Walmart. Analysts predict a slowdown in Walmart’s revenue growth to 4% for the current year, amid potential tariff-related worries.

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Why It Matters: Brian Mulberry, a client portfolio manager at Zacks Investment Management, said he would use Walmart’s in-house brand,  Great Value, as a gauge of the tariff impact. He pointed out that more than 70% of the household and generic non-food products sold under this brand are sourced from China.

In its April 2024 annual filing, Walmart cautioned that significant changes in tax and trade policies, including tariffs, could negatively impact its business and financial performance. Also in November, Walmart's CFO, John David Rainey told CNBC "We never want to raise prices.". However, he stated that they may have to do so on selected items if President-elect Donald Trump's proposed tariffs became effective.

However, UBS analyst Michael Lasser believes that consumers may flock to Walmart even more for low-priced goods due to increasing inflationary pressure. “We believe Walmart would be one of the better-positioned retailers to mitigate or manage through tariffs, given its price leadership, buying power, and global sourcing capabilities,” said Lasser.

The anticipation of record-breaking sales comes on the heels of a strong performance by Walmart’s stock, which rallied nearly 15% year-to-date, partly attributed to its $34 million acquisition of the Monroeville Mall in Pittsburgh on Feb 4. Despite increased investment positions by many funds in the fourth quarter, over-optimistic momentum indicators hint at a likely pullback.

• READ MORE: Trump Announces 25% Tariff On Auto Imports, Chips And Pharmaceuticals, Shaking Global Trade: Nvidia, Apple, TSMC And Others In Focus

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.