US retail giant Walmart is expected to report record-breaking annual sales, with estimates suggesting a 5% rise to $680.47 billion for the year ending January 31, 2025. However, some investors are worried that its bargain-price approach may leave the company vulnerable under President Donald Trump’s tariffs on goods made in China and other countries.
Walmart, which serves as a barometer for consumer spending due to its scale and market share, is likely to show slower revenue growth of 4% in the current year, according to analysts. The retailer generates 40% of its sales from discretionary merchandise sourced primarily from China, India, and other nations targeted by Trump’s new tariffs.
Walmart’s Great Value in-house brand, which accounts for a significant portion of its sales, is being watched closely as a gauge of the impact of tariffs on the company’s business. Analysts expect any pressure on margins to be minimal, given Walmart’s success in maintaining margin growth over the past few years.
The retailer has committed to investing $350 billion over 10 years to source products from suppliers that make, grow, or assemble in the US, aiming to save costs by shortening lead times and keeping shelves better stocked. Despite this, investors are concerned about the potential impact of tariffs on Walmart’s business, particularly if the company is forced to pass on increased costs to consumers.
However, some analysts believe that Walmart’s everyday low-price strategy would likely drive shoppers to spend more there, making it one of the better-positioned retailers to mitigate or manage through tariffs. With its price leadership, buying power, and global sourcing capabilities, Walmart is well-equipped to navigate the challenges posed by Trump’s tariffs.
Source: https://www.reuters.com/business/retail-consumer/walmart-faces-some-tariff-challenges-wall-street-awaits-record-breaking-sales-2025-02-19