The news: After several bumper years, Walmart is bracing for uncertainty in 2025.

• The retailer expects FY26 profit of $2.50 to $2.60 per share, well below Wall Street analysts’ average estimate of $2.76.
• Net sales are forecast to rise between 3% and 4% to $694.7 billion to $701.5 billion, short of FactSet’s consensus estimate of $702 billion. That would mark a deceleration from the 5.1% year-over-year growth Walmart posted for 2024.

The operative word is uncertainty: Walmart’s cautious projection is yet another red flag for the retail sector, especially coming on the heels of similarly downbeat forecasts from the likes of Amazon and Levi Strauss.

• Like those companies, Walmart anticipates the strong dollar will weigh on profitability; unfavorable exchange rates are expected to result in a 5-cent headwind to adjusted earnings per share.
• Lack of clarity around the Trump administration’s tariff plans makes it nearly impossible to forecast performance. Walmart’s current guidance leaves out the potential impact of tariffs on Mexican and Canadian imports because the retailer is unsure whether they will be implemented—an assumption that’s not unreasonable, but one that could be quickly upended by the next presidential tweet.

But there’s an upside: Despite the volatility of the retail landscape, Walmart is in better shape than most of its peers, thanks to a practically unbeatable combination of low prices, wide product assortment, and convenience.

• Consumers rely on the big-box giant for everyday necessities. US comparable sales rose 4.6% YoY in Q4, driven by a mid-single-digit increase in grocery sales.
• Walmart’s ecommerce business is gaining momentum. Ecommerce now accounts for 18% of Walmart’s global sales; the channel grew 20% YoY in the US alone in Q4, helped by its expanded marketplace assortment and investments in faster, more efficient delivery.

It also helps that the retailer has profit-boosting initiatives—including its fast-growing advertising, membership, and fulfillment businesses—that can offset the impact of tariffs and other potential headwinds. Advertising and membership alone accounted for more than a quarter of Walmart’s operating income in Q4, CFO John David Rainey said on the company’s earnings call.

• Walmart Connect revenues climbed 24% YoY in Q4, helped by a roughly 50% increase in the number of marketplace sellers using the retailer’s ad capabilities. With the Vizio acquisition, Walmart is set to become an even more attractive destination for ad dollars: We expect its US ad revenues to grow 28.9% this year to $4.99 billion.
• Nearly half of Walmart’s marketplace sellers are using its fulfillment services, up nearly 600 basis points compared with the previous year—creating another high-margin revenue stream.
• Membership income is growing fast. Walmart+ had double-digit growth in Q4, while Sam’s Club’s investments in customer experience are boosting sign-ups and renewal rates.

The big picture: Walmart is well-positioned to ride out uncertainty thanks to its large grocery and private-label businesses, price advantage, and scale. But its cautious outlook underscores the challenging environment retailers face in 2025 as they navigate tariffs, falling consumer sentiment, and weakening demand.