10-QPeriod: Q1 FY2017

Walmart Inc. Quarterly Report for Q1 Ended Apr 30, 2016

Filed June 3, 2016For Securities:WMT

Summary

Walmart Inc. reported its first-quarter results for fiscal year 2017, ending April 29, 2016. Total revenues saw a modest increase of 0.9% to $115.9 billion, primarily driven by a 0.9% rise in net sales. However, consolidated net income attributable to Walmart decreased to $3.08 billion from $3.34 billion in the prior year's quarter, resulting in a dip in diluted earnings per share to $0.98 from $1.03. The company's performance was impacted by several factors, including negative currency exchange rate fluctuations totaling $3.5 billion, which significantly affected the Walmart International segment. While Walmart U.S. demonstrated solid comparable store sales growth of 2.9%, the overall consolidated results were pressured by increased operating expenses, largely due to investments in associate wages and technology, and a decline in operating income. Despite these pressures, the company maintained strong operational cash flow and highlighted ongoing strategic investments in integrating physical and digital retail to support long-term growth.

Financial Highlights

49 data points
Beta

Revenue

$115.90B

25.3% Gross Margin

Net Income

$3.08B

2.7% Net Margin

EPS (Diluted)

$0.33

Total Assets

$198.71B

Cash & Equivalents

$7.60B

Free Cash Flow

$3.98B

Financial Statements
Beta
Revenue$115.90B
Cost of Revenue$86.54B
Gross Profit$29.36B
SG&A Expenses$24.09B
Operating Income$5.28B
Interest Expense$499.00M
Net Income$3.08B
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)9.43B
Shares Outstanding (Diluted)9.46B

Key Highlights

  • 1Total revenues increased 0.9% to $115.9 billion for the three months ended April 30, 2016.
  • 2Consolidated net income attributable to Walmart decreased by 7.9% to $3.08 billion compared to the prior year's quarter.
  • 3Diluted EPS decreased to $0.98 from $1.03 in the same period last year.
  • 4Walmart U.S. segment showed strong net sales growth of 4.3% driven by comparable store sales increase of 2.9%.
  • 5Walmart International segment experienced a 7.2% decrease in net sales, largely due to unfavorable currency exchange rates ($3.5 billion impact).
  • 6Operating income decreased by 7.5% to $5.28 billion, impacted by increased operating expenses (wage investments, digital retail) and lower gross profit in some areas.
  • 7Free cash flow significantly increased to $4.0 billion from $2.2 billion in the prior year, attributed to improved working capital management.

Frequently Asked Questions

Walmart experienced a slight increase in total revenues by 0.9% to $115.9 billion. However, net income attributable to Walmart decreased by 7.9% to $3.08 billion, and diluted earnings per share fell to $0.98 from $1.03 in the prior year's quarter. This was influenced by factors like currency headwinds and increased operating expenses.

The Walmart U.S. segment performed well, with net sales increasing 4.3% due to a 2.9% comparable store sales growth. In contrast, the Walmart International segment saw a 7.2% decline in net sales, significantly impacted by negative currency exchange rate fluctuations totaling $3.5 billion. Sam's Club reported a modest 1.0% increase in net sales, but excluding fuel sales, the growth was 2.9%.

Profitability was pressured by a decrease in operating income, which fell by 7.5%. This was primarily driven by an increase in operating expenses, including investments in associate wages and digital retail initiatives, as well as a reduction in gross profit margins in certain categories like general merchandise. Additionally, the strong negative impact from currency exchange rates on the international segment contributed to lower overall profitability.

Walmart generated strong operating cash flow, with net cash provided by operating activities increasing to $6.2 billion. Free cash flow saw a significant rise to $4.0 billion from $2.2 billion in the prior year, primarily due to improved working capital management. The company also continued its share repurchase program, increasing buybacks to $2.7 billion in the quarter and maintaining its dividend payments.