Walmart's Weak Forecast Triggers Retail Stock Sell-Off, Signals Consumer Slowdown

Walmart's disappointing guidance for the fiscal year ending January 2026 has raised alarms about a potential slowdown in consumer spending, causing its shares to drop by 6% and impacting the broader retail sector. The retailer forecasted adjusted earnings per share between $2.50 and $2.60, falling short of analysts' expectations of $2.76, which reflects concerns over inflation's impact on consumer purchasing power. Walmart anticipates annual sales growth of 3% to 4%, also below the expected 4%, indicating that inflation-weary consumers might be pulling back. Analysts are closely watching upcoming retail earnings to assess the resilience of the sector amid these economic uncertainties. Despite the cautious outlook, Walmart's CFO expressed confidence in the resilience of U.S. shoppers, who are increasingly focused on value. The company's forecast is seen as a critical indicator of how retailers will navigate potential economic challenges, including the effects of new tariffs.