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Walmart trims profit outlook as tariff costs hit the retail bellwether

Walmart trims profit outlook as tariff costs hit the retail bellwether

Money Moves

The largest U.S. retailer signals limits on how much it can absorb

May 21st, 2026: Walmart cuts FY27 profit guidance

Overview

Updated May 21

Walmart sells roughly one in four grocery dollars in the United States. On Wednesday it told investors that profit this fiscal year will land below what Wall Street expected, citing tariffs on imported general merchandise.

Revenue still grew 7.3% and eCommerce jumped 26%. The squeeze is on margins, not sales. Walmart's posture matters because it sets the price floor for the rest of retail — what Walmart passes to shoppers, Target and Kroger usually pass too.

Why it matters

Walmart is the price-setter for American retail. When its margins crack on tariffs, household grocery and apparel bills follow within months.

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Key Indicators

7.3%
Q1 revenue growth
Total revenue growth year-over-year; 5.9% in constant currency.
26%
Global eCommerce growth
Online sales kept compounding even as profit guidance softened.
$2.75-$2.85
FY27 adjusted EPS guidance
Below the roughly $2.91 analyst consensus before the print.
~$2.91
Prior analyst consensus EPS
The figure Walmart's guidance came in below.
~1/3
Imported general merchandise share
Roughly a third of Walmart's general merchandise is imported, with China the largest single source.

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People Involved

Doug McMillon
Doug McMillon
President and CEO, Walmart
Defending margins while signaling selective price increases
 John David Rainey
John David Rainey
Chief Financial Officer, Walmart
Authored the softer profit guidance
 Donald Trump
Donald Trump
President of the United States
Tariff architect; has publicly pressured Walmart not to raise prices

Organizations Involved

Walmart Inc.
Walmart Inc.
Retailer
Reporting tariff-driven margin pressure

The largest U.S. retailer by revenue and the country's biggest private employer.
Target Corporation
Target Corporation
Multinational retailer
Closely watched comparison; reports the following week

The second-largest general merchandise retailer in the U.S., with higher discretionary exposure than Walmart.

Timeline

February 2025 May 2026

5 events Latest: May 21st, 2026 · 4 months ago
Tap a bar to jump to that date

  1. Walmart cuts FY27 profit guidance

    Latest Earnings

    Reports 7.3% revenue growth and 26% eCommerce growth, but guides FY27 adjusted EPS to $2.75-$2.85, below the ~$2.91 consensus. Shares decline. Management cites tariff pass-through on imported general merchandise.

  2. Walmart Q4 FY26 results: margins narrow

    Earnings

    Full-year results show tariff drag on operating margin. Initial FY27 outlook is cautious but not yet cut.

  3. Walmart says it cannot absorb all tariff costs

    Statement

    On the Q1 FY26 call, McMillon and Rainey tell analysts some price increases are coming. Trump responds on social media, telling Walmart to absorb the costs.

  4. Broad reciprocal tariff package announced

    Policy

    Trump announces sweeping country-by-country tariffs. Retail industry groups warn of price increases within weeks.

  5. Trump imposes 10% tariff on Chinese imports

    Policy

    Initial second-term tariff order takes effect, raising landed cost on a large share of Walmart's general merchandise.

Scenarios

1

Walmart misses the FY27 guidance it just issued

Possible Resolves by Q1 2027

Discussed by: Bearish sell-side analysts at Morgan Stanley and Bernstein

Tariff pressure compounds through the back half of the fiscal year. Walmart's full-year adjusted EPS lands below $2.75, the bottom of today's range. This would signal that even Walmart's scale cannot offset the cost shock without deeper price hikes — which would in turn slow unit volumes.

2

Walmart hits or beats the guidance after raising prices

Likely Resolves by Q1 2027

Discussed by: Bank of America retail analyst Robert Ohmes and Walmart-bull buy-side notes

Walmart passes more tariff cost to shelves over the next two quarters, holds units roughly flat thanks to its grocery anchor, and lands FY27 EPS inside or above the $2.75-$2.85 range. The cost shows up in U.S. CPI goods inflation, not in Walmart's P&L.

3

Tariffs are rolled back enough for Walmart to raise guidance

Unlikely Resolves by Feb 28, 2027

Discussed by: Reuters and Bloomberg reporters covering U.S.-China trade talks

A negotiated reduction in tariff rates on Chinese consumer goods lands before year-end. Walmart raises FY27 guidance on a subsequent earnings call, restoring the margin assumption analysts had before today.

4

Consumer pullback hits comparable sales next quarter

Possible Resolves by Aug 31, 2026

Discussed by: JPMorgan retail team and Numerator consumer trackers

Price increases finally bite into demand. U.S. comparable sales decelerate sharply in Q2 FY27, breaking the multi-quarter streak of mid-single-digit growth. The story flips from margin pressure to demand pressure.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

August 1971 - April 1974

Nixon-era price controls and retailer compliance (1971-1974)

Facing inflation, Nixon imposed a 90-day price freeze followed by years of phased controls. Retailers and manufacturers fought over who would absorb the squeeze when input costs rose but shelf prices were capped.

Then

Margins compressed across consumer goods. Shortages emerged in categories where producers refused to sell at controlled prices.

Now

Controls were abandoned by 1974 and contributed to the 1970s stagflation.

Why this matters now

Pressure from a president to hold prices down while input costs rise is not new. The historical lesson is that the squeeze eventually shows up somewhere — in margins, in shortages, or on the shelf.

September 2018 - December 2019

First-term Trump tariffs and Walmart's pricing response (2018-2019)

Trump's first administration imposed tariffs on $250 billion of Chinese imports. Walmart filed a public letter warning the U.S. Trade Representative that prices would rise on bicycles, backpacks, hats, and Christmas lights. Walmart ultimately raised prices selectively and pushed suppliers to eat part of the cost.

Then

Walmart held grocery flat but raised prices on tariffed general merchandise categories. Margins were pressured but earnings still grew.

Now

Walmart accelerated supplier diversification out of China — by 2024 a smaller share of Walmart's imports came directly from Chinese factories than in 2017.

Why this matters now

The 2018 playbook — selective pass-through plus supplier pressure — is the template Walmart is running again, but the 2025 tariffs are broader and the absorption room is thinner.

May - August 2022

Walmart's 2022 inventory glut and consumer warning

Walmart cut profit guidance twice in three months, citing a sudden shift in consumer spending from discretionary goods to food and necessities. Inventory piled up on apparel and home, forcing markdowns.

Then

Shares fell, and the warning was treated as the first credible signal that pandemic-era consumer behavior was breaking.

Now

Walmart's grocery-anchored model was vindicated through the inflation cycle as higher-income shoppers traded down to its stores.

Why this matters now

Walmart's guidance cuts move broader retail expectations, not just its own stock. Today's print will be read the same way.

Sources

(3)
Walmart Corporate HeyGoTrade TradingKey