Shoppers flocked to Walmart in 2024, drawn by the retailer’s vast selection of groceries and clothing. However, the retail giant could face a tougher road ahead in 2025 as inflation ticks back up and Trump’s tariffs kick in. This economic landscape is projected to challenge retailers across the board, but Walmart’s size and scale may offer some unique advantages.

On Thursday, Walmart announced that its sales and profit growth will slow this year. The forecast prompted a significant drop in the company’s stock, falling as much as 8% during pre-market trading. Walmart acknowledges that while sales are expected to increase by up to 4% and profit by up to 5.5%, these figures fell short of investor expectations.

David Silverman, a senior director at Fitch Ratings, foresees “retail choppiness to continue in 2025,” attributing this to a recent dip in consumer sentiment, especially among lower-income consumers, and the impact of tariffs.

Walmart, the largest retailer in the United States and a key indicator of consumer spending, is signaling a rocky road for the retail industry in 2025. Its slowdown is indicative of broader challenges faced by the entire sector.

Navigating Economic Uncertainty

Despite the challenges, Walmart’s business remains strong, with the company deeming consumers as “resilient.” However, the retailer has acknowledged the need to navigate tariffs and other macroeconomic uncertainties.

“Retail choppiness to continue in 2025,” given a recent dip in consumer sentiment, particularly for lower-end consumers and tariffs, he [David Silverman] said in a note to clients Thursday.

David Silverman, Senior Director, Fitch Ratings

Strategies to Mitigate Impact

Walmart’s finance chief, John David Rainey, noted that the outlook for 2025 assumes a relatively stable macroeconomic environment. However, uncertainties related to consumer behavior and global economic and geopolitical conditions persist.

Rainey emphasized,

Walmart’s outlook “assumes a relatively stable macroeconomic environment” but “acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions.”
John David Rainey, Walmart Finance Chief

Walmart’s vast size and scale could allow it to manage tariffs more effectively than smaller competitors. Economists suggest that Walmart can leverage its negotiating power to keep prices down with suppliers, helping to soften the tariff impact. On the other hand, smaller retailers may have to pass on increased costs to consumers or struggle to maintain profitability.

Consumer Sentiment and Inflation Concerns

Americans are increasingly concerned about the economy. A recent poll shows that 62% of adults nationwide feel that President Donald Trump has not gone far enough in his efforts to reduce the price of everyday goods. Inflation remains a significant concern, with consumer prices rising 0.5% from December to January. Energy and food costs, particularly eggs, have surged due to a deadly avian flu outbreak, affecting prices across the nation.

Despite the inflationary pressures,

Walmart expects a normal inflation rate of 1% to 2% in 2025, although recent spikes in egg prices may test this projection.

This cautious optimism reflects Walmart’s confidence in its ability to manage supply chain disruptions and maintain price stability for consumers.