10-QPeriod: Q3 FY2021

Walmart Inc. Quarterly Report for Q3 Ended Oct 31, 2020

Filed December 2, 2020For Securities:WMT

Summary

Walmart Inc.'s (WMT) Form 10-Q for the period ending October 31, 2020, showcases a robust financial performance, significantly boosted by increased consumer spending driven by the COVID-19 pandemic. Total revenues saw a substantial increase year-over-year for both the three-month and nine-month periods, primarily fueled by strong comparable sales growth in the Walmart U.S. segment. The company also demonstrated effective cost management, leading to improved operating income. Despite external challenges, Walmart maintained its focus on strategic capital allocation and operational discipline. The company's financial health is further evidenced by a significant increase in net cash provided by operating activities, indicating strong operational efficiency. While the company is navigating divestitures of international assets like Asda and Walmart Argentina, and facing ongoing legal proceedings, its core U.S. operations are performing exceptionally well. The report highlights the accelerating growth of its e-commerce segment, which continues to be a key driver of overall performance and customer engagement.

Financial Highlights

49 data points
Beta

Revenue

$133.75B

25.0% Gross Margin

Net Income

$5.20B

3.9% Net Margin

EPS (Diluted)

$0.60

Total Assets

$250.86B

Cash & Equivalents

$14.32B

Free Cash Flow

$1.05B

Financial Statements
Beta
Revenue$133.75B
Cost of Revenue$100.34B
Gross Profit$33.41B
SG&A Expenses$28.59B
Operating Income$5.78B
Interest Expense$455.00M
Net Income$5.20B
EPS (Basic)$0.60
EPS (Diluted)$0.60
Shares Outstanding (Basic)8.50B
Shares Outstanding (Diluted)8.55B

Key Highlights

  • 1Total revenues increased by 5.2% to $134.7 billion for the three months ended October 31, 2020, and by 6.5% to $407.1 billion for the nine months ended October 31, 2020, compared to the prior year periods, driven by strong comparable sales.
  • 2Walmart U.S. segment net sales increased by 6.2% to $88.4 billion for the third quarter and by 8.7% to $270.4 billion for the first nine months, showcasing robust domestic performance.
  • 3Operating income grew to $5.8 billion for the quarter and $17.1 billion for the nine months, reflecting improved profitability and operational efficiency.
  • 4Net cash provided by operating activities significantly increased to $22.9 billion for the first nine months, up from $14.5 billion in the prior year, indicating strong cash generation.
  • 5E-commerce sales continued to accelerate, contributing significantly to comparable sales growth across all segments, particularly in Walmart U.S. where it added 5.6% to comparable sales in the third quarter.
  • 6The company announced divestitures of Asda and Walmart Argentina, which are expected to impact future financial results but align with strategic portfolio management.
  • 7Despite some legal proceedings and the ongoing impact of COVID-19, the company reported strong liquidity and reiterated its commitment to shareholder returns through dividends and share repurchases.

Frequently Asked Questions

The COVID-19 pandemic positively impacted Walmart's financial performance by driving increased consumer demand, leading to higher net sales and comparable sales growth across its U.S. and international segments. The company experienced accelerated growth in e-commerce as customers increasingly opted for convenience. However, Walmart also incurred incremental costs related to associate safety, enhanced cleaning, and expanded benefits.

The divestitures of Asda and Walmart Argentina are part of Walmart's strategy to optimize its international portfolio and focus on long-term growth. These actions, while resulting in significant non-cash losses reported in this period (Walmart Argentina) or expected in future periods (Asda), aim to streamline operations and improve overall financial performance by shedding underperforming or strategically misaligned assets.

Walmart's e-commerce business demonstrated strong and accelerating growth during this period. E-commerce sales significantly contributed to overall comparable sales growth, driven by initiatives like store pickup and delivery, and the continued expansion of its online platform. This growth underscores the company's successful transition to an omni-channel retail strategy.

Walmart maintains a strong liquidity position, evidenced by a substantial increase in net cash provided by operating activities. The company believes its cash flows from operations, cash reserves, and access to capital markets are sufficient to meet its operational needs, fund capital expenditures, pay dividends, and execute share repurchases. The company also has significant committed lines of credit that remain undrawn.