10-KPeriod: FY2016

Walmart Inc. Annual Report, Year Ended Jan 31, 2016

Filed March 30, 2016For Securities:WMT

Summary

Walmart Inc.'s 2016 10-K filing provides a comprehensive overview of its operations for the fiscal year ending January 31, 2016. The company continues to emphasize its core strategy of leading on price through "Everyday Low Prices" (EDLP) and managing costs with "Everyday Low Cost" (EDLC). This strategy aims to maintain customer trust and competitiveness across its vast retail network. The report details the company's three primary operating segments: Walmart U.S., Walmart International, and Sam's Club, highlighting their respective contributions to overall revenue and operational focus. Significant attention is given to the integration of physical and digital retail, with Walmart actively investing in e-commerce capabilities and services like "Walmart Pickup" and "Online Grocery" to create a seamless customer experience. The company also addresses its substantial global workforce, noting initiatives in associate pay and training, alongside the inherent risks associated with a global supply chain, currency fluctuations, and increasing competition in both brick-and-mortar and online spaces. Investors should note the ongoing discussions regarding the Foreign Corrupt Practices Act (FCPA) and other legal proceedings, which the company states it does not currently believe will have a material adverse effect, but remain areas of monitoring.

Financial Highlights

51 data points
Beta

Revenue

$482.13B

25.1% Gross Margin

Net Income

$14.69B

3.0% Net Margin

EPS (Diluted)

$1.52

Total Assets

$199.58B

Cash & Equivalents

$8.71B

Free Cash Flow

$16.07B

Financial Statements
Beta
Revenue$482.13B
Cost of Revenue$360.98B
Gross Profit$121.15B
SG&A Expenses$97.04B
Operating Income$24.11B
Interest Expense$2.03B
Net Income$14.69B
EPS (Basic)$1.53
EPS (Diluted)$1.52
Shares Outstanding (Basic)9.62B
Shares Outstanding (Diluted)9.65B

Key Highlights

  • 1Total revenues for the fiscal year ended January 31, 2016, reached $482.1 billion, with net sales comprising $478.6 billion.
  • 2The company operates across three reportable segments: Walmart U.S. (62% of net sales), Walmart International (26% of net sales), and Sam's Club (12% of net sales).
  • 3Walmart continues to invest in its digital and e-commerce capabilities, aiming to seamlessly integrate them with its extensive physical store network.
  • 4Significant focus on associate compensation and training, with pay raises impacting approximately 1.2 million U.S. associates.
  • 5The company is navigating various risks, including macroeconomic factors, intense competition, supply chain disruptions, currency fluctuations, and ongoing legal matters, notably an FCPA investigation.
  • 6Walmart operated over 11,500 stores under 63 banners in 28 countries and e-commerce websites in 11 countries as of January 31, 2016.
  • 7The company is actively repurchasing shares, with $17.5 billion in authorization remaining under its current program as of January 31, 2016.

Frequently Asked Questions

Walmart's core strategy revolves around "Everyday Low Prices" (EDLP) and "Everyday Low Cost" (EDLC). EDLP ensures customers can trust consistent low prices, while EDLC focuses on controlling operational expenses to pass savings onto consumers. This is complemented by differentiating on access, competitive assortment, and delivering a great customer experience, integrating both physical and digital retail.

The Walmart International segment generated approximately 26% of the company's net sales in fiscal year 2016, amounting to $123.4 billion. These operations span 27 countries and utilize numerous retail formats. While contributing significantly to overall revenue, the segment's gross profit rate is generally lower than Walmart U.S. due to its merchandise mix.

Walmart is heavily investing in its digital and e-commerce capabilities to create a customer-centric experience that seamlessly integrates online and physical shopping. This includes growing its e-commerce websites, mobile applications, and services like "Walmart Pickup," "Pickup Today," and "Online Grocery." The goal is to provide customers with access to a broader assortment anytime and anywhere, reinforcing its omnichannel strategy.

Yes, Walmart is involved in several legal proceedings, including wage-and-hour class actions and a significant ongoing investigation into alleged violations of the Foreign Corrupt Practices Act (FCPA) related to its foreign subsidiaries. The company is also facing 'equal value' claims in the UK. While Walmart states it does not currently believe these matters will have a material adverse effect on its financial condition, they represent ongoing risks and potential costs, including legal fees and possible fines or penalties.