Walmart keeps sales targets, shares fall after strong quarter

Walmart’s stronger-than-expected quarter did not come with a bigger sales promise, and that caution rattled investors. The company kept its full-year net sales growth target at 3.5% to 4.5% and held adjusted earnings per share at $2.75 to $2.85 after first-quarter operating income rose 5% to $7.49 billion and net sales climbed 7.1% to $175.7 billion. Shares fell more than 4% on the news, with CNBC later reporting an intraday drop of about 8% after Walmart also guided second-quarter earnings per share to 72 cents to 74 cents, below the 75-cent estimate.

For hourly associates and store managers, the real story is not that business is weak. It is that Bentonville is still treating the customer as fragile, and that usually filters down to the floor in practical ways. Walmart said shoppers continued to favor low-priced groceries and essentials as fuel costs rose, while the University of Michigan reported consumer sentiment at 44.8 in May, a record low, with 57% of consumers spontaneously saying high prices were eroding their finances. In that kind of environment, department managers tend to watch price perception, out-of-stocks and how quickly shoppers move between premium and value items. It also puts more pressure on labor hours, scheduling discipline and productivity, because every stocked shelf and every clean pickup handoff matters more when customers are trading down.

The company’s growth engine is also shifting more work into digital and fulfillment operations. Walmart said global eCommerce grew 26% in the quarter, Walmart Connect in the U.S. grew 44% excluding VIZIO, and about 50% of U.S. eCommerce fulfillment-center volume was automated. Store-fulfilled delivery has more than doubled over the past two years, and more than 36% of those orders were delivered in under three hours. That points to more emphasis on picking speed, staging accuracy, substitutions and delivery timelines, not just foot traffic on the sales floor.

Chief Financial Officer John David Rainey said higher tax returns muted some of the pressure from elevated fuel prices in the first quarter, but that consumers may feel more strain in the second quarter as refunds fade. Put together, the quarter showed a company still gaining share and still using price, convenience and automation to win, while sending stores a clear message: keep the execution tight, because the customer backdrop could get rougher before it gets easier.