10-QPeriod: Q1 FY2021

Walmart Inc. Quarterly Report for Q1 Ended Apr 30, 2020

Filed June 3, 2020For Securities:WMT

Summary

Walmart Inc. reported strong performance for the first quarter of fiscal year 2021, ending April 30, 2020, demonstrating resilience amidst the global COVID-19 pandemic. Total revenues increased by 8.6% to $134.6 billion, driven by a significant surge in net sales, up 8.7% to $133.7 billion. This growth was primarily fueled by unprecedented demand for essential goods and a notable acceleration in eCommerce sales, with U.S. comparable sales rising by 10.5% driven by increased average ticket size as consumers consolidated shopping trips. Despite facing incremental costs related to associate safety and customer well-being due to the pandemic (approximately $0.9 billion), Walmart managed to improve operating expense leverage, with operating expenses as a percentage of net sales decreasing. Consolidated net income attributable to Walmart increased to $3.99 billion ($1.40 per diluted share), up from $3.84 billion ($1.33 per diluted share) in the prior year's quarter. The company also significantly boosted its cash position, with cash and cash equivalents growing to $14.9 billion, reflecting a strategic move to enhance financial flexibility during uncertain times.

Financial Highlights

49 data points
Beta

Revenue

$133.67B

23.7% Gross Margin

Net Income

$4.07B

3.0% Net Margin

EPS (Diluted)

$0.47

Total Assets

$232.89B

Cash & Equivalents

$14.93B

Free Cash Flow

$5.26B

Financial Statements
Beta
Revenue$133.67B
Cost of Revenue$102.03B
Gross Profit$31.65B
SG&A Expenses$27.37B
Operating Income$5.22B
Interest Expense$510.00M
Net Income$4.07B
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)8.49B
Shares Outstanding (Diluted)8.55B

Key Highlights

  • 1Total revenues rose 8.6% to $134.6 billion, driven by a strong 8.7% increase in net sales to $133.7 billion.
  • 2U.S. comparable sales saw a robust increase of 10.5%, fueled by pandemic-driven demand and increased average ticket size.
  • 3eCommerce sales experienced strong growth, contributing approximately 4.0% to U.S. comparable sales.
  • 4Consolidated net income attributable to Walmart grew to $3.99 billion, or $1.40 per diluted share, compared to $3.84 billion, or $1.33 per diluted share, in the prior year.
  • 5Operating expenses as a percentage of net sales improved by 62 basis points due to strong sales growth, despite incremental COVID-19 related expenses.
  • 6Cash and cash equivalents significantly increased to $14.9 billion, up from $9.3 billion in the prior year, reflecting enhanced financial flexibility.
  • 7Capital expenditures decreased to $1.75 billion from $2.21 billion in the prior year, aligning with a more disciplined approach to capital allocation.

Frequently Asked Questions

The COVID-19 pandemic significantly boosted Walmart's revenue and net sales due to unprecedented demand for essential goods, especially in food and consumables. While this led to increased operational costs for associate safety and customer well-being (approximately $0.9 billion in incremental expenses), the strong sales growth allowed for improved operating expense leverage. eCommerce sales also saw substantial growth as customers shifted to online shopping.

Walmart anticipates continued uncertainty in its business and the global economy due to the pandemic's duration and intensity. However, the company believes its operating cash flows, current cash position, and access to capital markets are sufficient to meet its operational needs, including funding capital expenditures, dividends, and share repurchases. They are managing share repurchases prudently to maintain a strong balance sheet.

Walmart U.S. saw a 10.5% increase in net sales, driven by strong comparable sales growth. The Walmart International segment also reported a 3.4% increase in net sales, despite currency headwinds, due to shifts in consumer behavior. Sam's Club experienced a 9.6% increase in net sales, benefiting from increased transactions due to the pandemic and a rise in membership income.

Walmart is maintaining a disciplined approach to capital spending, with total capital expenditures decreasing compared to the prior year. The company is prioritizing customer-facing initiatives and omnichannel experience. Share repurchases are being managed prudently, and the company declared an increased annual dividend of $2.16 per share for fiscal 2021.