Walmart CEO Furner begins tenure with conservative outlook

By Juveria Tabassum and Aishwarya Venugopal

Feb 19 (Reuters) – Walmart’s new CEO John Furner kicked off his tenure with a coming-year forecast that fell short of analyst expectations on Thursday, even as online demand bolstered revenue in the holiday quarter.

Analysts were expecting some caution in the company’s projections for the year as  Furner enters his first quarter at the helm. Its expectation for 3.5% to 4.5% growth for the coming year is similar to its initial outlook for the year that ended. 

While other consumer companies have struggled with customers balking at higher-priced items, Walmart has posted strong sales in recent quarters, mainly due to richer customers shopping more at its ecommerce platforms.

That held true for the most recent quarter, as contribution to U.S. sales from ecommerce almost doubled. Overall revenue rose 5.6% to $190.66 billion, a smidge ahead of expectations.

“The pace of change in retail is accelerating… For our customers and members, the future is fast, convenient, and personalized,” Furner said in a statement. The company also announced a fresh $30 billion share buyback plan.

Walmart’s stock has been a consistent outperformer, with gains of 22% over the last year that made it the first retailer to exceed $1 trillion in market value. Its shares were down about 3% in premarket trading.

“The real issue this morning sits with the fact that Walmart’s stock came into the earnings print at or near an all time high, which makes the reaction function arduous at best,” said Art Hogan, chief market strategist at B Riley Wealth.

THE FURNER ERA

Markets have cheered Furner’s appointment, following his leadership of Walmart’s U.S. business through the pandemic and his efforts to adapt to AI‑driven changes ahead of rivals. Walmart’s U.S. unit, now led by David Guggina, accounts for nearly 70% of its annual revenue.

 The company now faces the task of scaling higher‑margin revenue streams such as advertising, while maintaining store performance and margins. Its global advertising business surged 37% in the quarter.

U.S. retail sales excluding automobiles, gasoline, building materials and food services eased 0.1% in December after a 0.2% gain in November, suggesting consumers have retrenched due to the higher cost of goods, partly due to import tariffs.

However, Walmart has stayed largely unscathed, reporting a 4.6% increase in U.S. same-store sales for the fourth quarter, which includes November, December and January. 

Analysts were expecting a rise of 4.2%. Data provided by shopper traffic tracker Placer.ai showed visits to Walmart’s 4,600 stores rose in every month of the quarter.

The retail giant’s dominance in groceries and its ability to secure the lowest prices from suppliers have made it a popular choice for value-conscious shoppers across income groups. 

ECOMMERCE SHINES

For the past two years, the Bentonville, Arkansas-based chain’s gain in market share has been driven by households earning more than $100,000. They have also bolstered its online sales, thanks to same-day and two-day deliveries and curbside pickup services. 

Walmart’s U.S. online sales rose 27% in the quarter, its 15th straight quarterly double-digit increase. The new shoppers have helped boost sales of higher-margin items such as clothing, kitchen appliances, furniture and toys. 

Sales through expedited store-fulfilled delivery channels grew more than 50% in the quarter, the company said.

The world’s largest retailer expects consolidated net sales for the fiscal year 2027 to rise between 3.5% and 4.5%, compared with analysts’ expectations of a roughly 5% increase, according to data compiled by LSEG.

It forecast adjusted earnings per share of $2.75 to $2.85, below expectations of $2.96. The company’s fourth-quarter adjusted earnings per share of 74 cents beat estimates of 73 cents.

(Reporting by Siddharth Cavale in New York and Juveria Tabassum and Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur)