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Walmart ( WMT ) annual sales seen rising 5% to record, LSEG

estimates

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Analysts see revenue growth slowing to 4% in current year

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Great Value in-house brand sales seen hinting at tariff

effects

By Siddharth Cavale

NEW YORK, Feb 19 (Reuters) - Penny-pinching Walmart ( WMT )

shoppers focus much more on getting the lowest prices

than on whether products are made in the U.S., Canada, China or

elsewhere, Walmart ( WMT ) executives have said.

When Walmart ( WMT ) 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 ( WMT ) 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 ( WMT ) 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 ( WMT ) 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 ( WMT ) 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 ( WMT )

revenue growth rate to slow to 4%, hinting at anxiety over

tariffs.

A Walmart ( WMT ) 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 ( WMT ) investor, said he will look at Walmart's ( WMT )

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 ( WMT ) 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 ( WMT ) investor, are concerned

whether results will show this "adverse effect" on its business.

"We are listening intently to see what guidance they give

surrounding this," said Hare, who expects any impacts to be

minimal. He cited Walmart's ( WMT ) success in maintaining margin growth

over the past few years, which included periods of high

inflation and port strikes.

Walmart ( WMT ) has maintained its profit margins by reducing

reliance on China, increasing warehouse automation, and

relocating white-collar jobs to lower-cost areas like Arkansas.

Walmart ( WMT ) has also committed to invest $350 billion over 10

years to source products from suppliers that make, grow or

assemble in the U.S., to help it save costs by shortening lead

times and keeping shelves better stocked.

"I don't want price increases to put pressure on sales

growth, so a balanced approach is needed," Hare said, explaining

he would like Walmart ( WMT ) to share tariff costs with suppliers and

manufacturers.

Walmart's ( WMT ) current-year sales growth forecast of 4% growth

exceeds that of rival Target ( TGT ), which sources much of its

inventory internationally, with China being its largest source,

S&P analysts wrote in a note.

Total annual revenue for Target ( TGT ), which reports holiday

quarter results on March 4, is estimated to decline about 1% in

2024 and rise by 2.5% in 2025, according to LSEG estimates.

UBS analyst Michael Lasser, who last week raised his price

target on Walmart's ( WMT ) stock to $113 from $100, said that while

Trump's election boosted inflationary pressures with new tariffs

and immigration policies, Walmart's ( WMT ) everyday low-price strategy

would likely drive shoppers to spend more there.

"We believe Walmart ( WMT ) would be one of the better positioned

retailers to mitigate or manage through tariffs, given its price

leadership, buying power, and global sourcing capabilities,"

Lasser said.