10-QPeriod: Q1 FY2016

Walmart Inc. Quarterly Report for Q1 Ended Apr 30, 2015

Filed June 5, 2015For Securities:WMT

Summary

Walmart Inc. reported its first-quarter results for fiscal year 2016, ending April 29, 2015. Total revenues remained relatively flat, decreasing by a marginal 0.1% to $114.8 billion compared to the prior year's $114.96 billion. This performance was impacted by a significant $3.3 billion negative effect from currency exchange rate fluctuations and a $560 million decrease in fuel sales due to lower prices, which offset positive comparable sales growth in the Walmart U.S. segment and increased e-commerce sales. Net income attributable to Walmart decreased by 7.2% to $3.34 billion, resulting in a diluted EPS of $1.03, down from $1.11 in the prior year's first quarter. The company's strategic focus remains on growth, particularly through investments in digital retail and associate wages. While these investments are expected to support long-term growth, they contributed to an increase in operating expenses as a percentage of net sales. The Walmart U.S. segment showed resilience with a 3.5% increase in net sales, driven by comparable store sales growth and e-commerce expansion. However, Walmart International experienced a 6.6% decline in net sales, primarily due to adverse currency movements. Sam's Club also saw a 3.0% decrease in net sales, largely influenced by lower fuel sales.

Financial Highlights

48 data points
Beta

Revenue

$114.83B

24.7% Gross Margin

Net Income

$3.34B

2.9% Net Margin

EPS (Diluted)

$0.34

Total Assets

$200.75B

Cash & Equivalents

$7.76B

Free Cash Flow

$2.24B

Financial Statements
Beta
Revenue$114.83B
Cost of Revenue$86.48B
Gross Profit$28.34B
SG&A Expenses$22.66B
Operating Income$5.68B
Interest Expense$523.00M
Net Income$3.34B
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)9.69B
Shares Outstanding (Diluted)9.73B

Key Highlights

  • 1Consolidated net sales remained nearly flat at $114.0 billion for the first quarter of FY2016, a slight decrease of 0.1% from $114.17 billion in the prior year.
  • 2Net income attributable to Walmart decreased by 7.2% to $3.34 billion, with diluted EPS falling to $1.03 from $1.11 in the comparable prior-year period.
  • 3The Walmart U.S. segment demonstrated solid growth with a 3.5% increase in net sales, driven by positive comparable store sales and e-commerce growth.
  • 4Walmart International faced significant headwinds, with net sales declining 6.6% due to unfavorable currency exchange rate fluctuations, which had a $3.3 billion negative impact.
  • 5Free cash flow generation decreased to $2.24 billion from $3.78 billion in the prior year's first quarter, mainly due to lower income from continuing operations and timing of payments.
  • 6The company continued its strategic investments in digital retail and associate wages, allocating $2.2 billion to capital expenditures and $270 million to e-commerce.
  • 7Walmart maintained a strong liquidity position, with cash and cash equivalents at $7.76 billion as of April 30, 2015.

Frequently Asked Questions

Walmart's total revenues were $114.8 billion, a slight decrease of 0.1% from $114.96 billion in the prior year's comparable quarter. This was primarily impacted by a $3.3 billion negative effect from currency exchange rate fluctuations and a $560 million decrease in fuel sales due to lower prices, which offset positive comparable sales in the U.S. and higher e-commerce sales.

Currency exchange rate fluctuations had a significant negative impact, accounting for $3.3 billion in decreased net sales for the first quarter of fiscal year 2016. This primarily affected the Walmart International segment, contributing to its sales decline.

Walmart is strategically investing in its associates through wage increases and comprehensive training programs, as well as in the integration of its digital and physical retail presence. These investments are aimed at supporting long-term growth while maintaining its core strategy of everyday low prices (EDLP) supported by everyday low costs (EDLC).

Walmart maintains a strong liquidity position, with cash and cash equivalents totaling $7.76 billion as of April 30, 2015. The company expects its operating cash flows, supplemented by long-term debt and short-term borrowings, to be sufficient to fund operations, global expansion, dividends, and share repurchases. Free cash flow for the quarter was $2.24 billion, down from $3.78 billion in the prior year, partly due to lower income and timing of payments.