In its Thursday earnings report, Walmart beat analyst expectations with quarterly results of $180 billion in revenue and $7.9 billion in operating profit. Yet it sent a chill down investors’ spines when it said it expected growth rates for revenue and profit to be lower this fiscal year. Walmart’s share price fell 6% on Thursday. 

The company cited uncertainty about what would happen with the economy over the next several months as the reason for the slowdown. 

“Our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions,” Walmart chief financial officer John David Rainey said during Thursday’s earnings call. 

Walmart forecasted sales growth between 3% to 4% and operating income growth in the ballpark of 3.5% to 5.5% for its next fiscal year. Both of those rates were lower than in 2024, when Walmart grew its topline 5.6%, while operating profits were up 10%. 

Rainey said the lowered guidance was a matter of prudence. 

“With respect to the guidance, look, similar to the last couple of years we have to acknowledge that we are in an uncertain time,” Rainey said. “And we don’t want to get out over our skis here. There’s a lot of the year to play out. Again, we feel good about our ability to navigate the environment, whether it’s tariffs or other macro uncertainty.”

Along with tariffs, Walmart cited other economic uncertainties such as how consumers are still grappling with tight personal budgets. However, the company projected confidence on both fronts, saying it had navigated tariffs in the past and pointing to its track record with price-sensitive consumers over the last several years when inflation was high. 

“Tariffs are something we’ve managed for many years, and we’ll just continue to manage that,” said Walmart CEO Doug McMillon. “We’ve got a great team. We know how to do that. We can’t predict what will happen in the future, but we can manage it really well.”

On the call, executives said they didn’t have “explicit assumptions” on tariffs in their guidance.

McMillon also pointed to the fact that for more than a year, some economists had forecasted a recession, which never came, as further evidence that while consumers were being thrifty, overall spending wouldn’t fall off a cliff. 

“We had seen clouds on the horizon and they never came,” McMillon said. “And I kind of feel that same way right now.”

Much of Walmart’s stellar performance was due to its ability to grow operating income faster than sales, proving to investors that the company could continue dominating its traditional retail business while simultaneously growing its new, higher-margin digital businesses. The fact that Walmart could walk and chew gum at the same time gave investors the confidence it would be around for the long haul. Walmart’s guidance shows that trend is expected to continue in 2025. 

However, Walmart’s problem is that it’s a victim of its own success. Some investors had expected that Walmart would barrel through whatever economic uncertainties might lie ahead, as it had for the past couple of years—especially after its banner year in 2024, in which its stock rose 70% and it outperformed all of its retail competitors, many of which struggled. In the eyes of these investors, anything less than a perfect earnings call would have led to a selloff. 

Ahead of the earnings call, a note from a UBS analyst predicted Walmart’s stock would continue its upward trajectory in part because of the “the expectation that the beat-and-raise cycle will continue throughout this year.” 

When Walmart beat, but didn’t raise, the cycle ended—or at least halted.