10-QPeriod: Q2 FY2019

Walmart Inc. Quarterly Report for Q2 Ended Jul 31, 2018

Filed September 6, 2018For Securities:WMT

Summary

Walmart Inc. reported its fiscal second-quarter results for the period ending July 31, 2018, revealing a net loss attributable to shareholders of $861 million, or $0.29 per diluted share. This contrasts with a net income of $2.9 billion, or $0.96 per diluted share, in the same period last year. The significant year-over-year decline in profitability was primarily driven by a substantial $4.8 billion pre-tax loss associated with the divestiture of its majority stake in Walmart Brazil, as well as a $1.9 billion decrease in the market value of its investment in JD.com. Despite the net loss, the company demonstrated strong operational performance in its core U.S. segment, with net sales increasing by 5.2% to $82.8 billion, driven by a comparable sales growth of 4.7%. This reflects continued customer traffic and sales momentum. The company also made significant strategic moves, including the acquisition of a majority stake in Flipkart, an Indian eCommerce marketplace, for approximately $16 billion, positioning itself for growth in emerging markets. While the reported net loss is a key concern, investors should consider the underlying operational strength in the U.S. and the strategic investments aimed at long-term growth.

Financial Highlights

50 data points
Beta

Revenue

$128.03B

25.4% Gross Margin

Net Income

-$861.00M

-0.7% Net Margin

EPS (Diluted)

$-0.10

Total Assets

$206.06B

Cash & Equivalents

$15.86B

Free Cash Flow

$3.47B

Financial Statements
Beta
Revenue$128.03B
Cost of Revenue$95.57B
Gross Profit$32.46B
SG&A Expenses$26.71B
Operating Income$5.75B
Interest Expense$460.00M
Net Income-$861.00M
EPS (Basic)$-0.10
EPS (Diluted)$-0.10
Shares Outstanding (Basic)8.84B
Shares Outstanding (Diluted)8.84B

Key Highlights

  • 1Reported a net loss attributable to shareholders of $861 million for the quarter, a significant decrease from the $2.9 billion net income in the prior year's second quarter.
  • 2The net loss was heavily impacted by a $4.8 billion pre-tax loss from the sale of a majority stake in Walmart Brazil.
  • 3Investment in JD.com decreased in value by $1.9 billion during the period, contributing to the net loss.
  • 4Walmart U.S. segment showed robust growth with net sales up 5.2% to $82.8 billion and comparable sales up 4.7%.
  • 5Acquired a 77% stake in Flipkart, an Indian eCommerce marketplace, for approximately $16 billion, signaling a strategic focus on international e-commerce expansion.
  • 6Operating expenses as a percentage of net sales decreased slightly across consolidated operations, indicating improved efficiency.
  • 7Maintained a strong liquidity position with $15.8 billion in cash and cash equivalents at the end of the period.

Frequently Asked Questions

The substantial net loss of $861 million was primarily due to a $4.8 billion pre-tax loss from the divestiture of Walmart's majority stake in Walmart Brazil. Additionally, a $1.9 billion decrease in the market value of its investment in JD.com also contributed to the loss.

The Walmart U.S. segment demonstrated strong performance, with net sales increasing by 5.2% to $82.8 billion. Comparable sales grew by 4.7%, driven by increases in customer traffic and ticket size, indicating underlying operational strength.

Walmart's major strategic move was the acquisition of approximately 77% of Flipkart, an Indian eCommerce marketplace, for about $16 billion. This acquisition aims to strengthen Walmart's position in high-growth international markets, particularly in e-commerce.

Walmart generated $6.8 billion in free cash flow for the six months ended July 31, 2018, which was relatively flat compared to the prior year. The company is strategically allocating capital towards remodels, e-commerce, technology, and supply chain, while reducing investment in new store openings.