10-QPeriod: Q2 FY2022

Walmart Inc. Quarterly Report for Q2 Ended Jul 31, 2021

Filed September 2, 2021For Securities:WMT

Summary

Walmart Inc. reported its second-quarter fiscal year 2022 results, showcasing steady revenue growth and improved profitability, largely driven by strong performance in Walmart U.S. and Sam's Club segments. Total revenues increased by 2.4% year-over-year to $141.0 billion, with net sales growing to $139.9 billion. Operating income saw a significant rise of 21.4%, reaching $7.4 billion, reflecting effective cost management and lower COVID-19 related expenses compared to the prior year. Diluted earnings per share (EPS) for the quarter were $1.52, a decrease from the prior year, largely due to a significant "other gains and losses" charge related to fair value changes in equity investments. The company completed the divestitures of its U.K. (Asda) and Japan (Seiyu) operations during the period, which impacted reported net sales in the Walmart International segment negatively. Despite these divestitures, Walmart U.S. comparable sales grew by 5.4%, and Sam's Club experienced a robust 13.9% comparable sales increase, both benefiting from stimulus spending and a return to pre-pandemic shopping behaviors. The company continues to strategically allocate capital towards supply chain, customer-facing initiatives, and technology, while also returning capital to shareholders through dividends and share repurchases.

Financial Highlights

48 data points
Beta

Revenue

$139.87B

24.8% Gross Margin

Net Income

$4.28B

3.1% Net Margin

EPS (Diluted)

$0.51

Total Assets

$238.55B

Cash & Equivalents

$22.83B

Free Cash Flow

$6.76B

Financial Statements
Beta
Revenue$139.87B
Cost of Revenue$105.18B
Gross Profit$34.69B
SG&A Expenses$28.51B
Operating Income$7.35B
Interest Expense$437.00M
Net Income$4.28B
EPS (Basic)$0.51
EPS (Diluted)$0.51
Shares Outstanding (Basic)8.40B
Shares Outstanding (Diluted)8.44B

Key Highlights

  • 1Total revenues increased 2.4% to $141.0 billion for the quarter, with net sales reaching $139.9 billion.
  • 2Operating income surged 21.4% to $7.4 billion, driven by improved operating discipline and reduced COVID-19 related costs.
  • 3Walmart U.S. delivered a strong 5.4% comparable sales growth, aided by stimulus spending and a shift back to pre-pandemic shopping habits.
  • 4Sam's Club reported impressive 13.9% comparable sales growth, benefiting from increased transactions and average ticket.
  • 5The company completed the divestitures of its U.K. (Asda) and Japan (Seiyu) operations, impacting international segment sales.
  • 6Diluted EPS of $1.52 was impacted by a $0.9 billion net loss from fair value changes in equity investments.
  • 7Capital expenditures increased, with a focus on supply chain, customer-facing initiatives, and technology.

Frequently Asked Questions

The divestitures of Asda (U.K.) and Seiyu (Japan) significantly reduced net sales in the Walmart International segment, showing decreases of 15.2% and 11.6% for the three and six months ended July 31, 2021, respectively. While these actions streamlined the international portfolio, they directly lowered reported consolidated revenues.

The diluted net income per common share attributable to Walmart decreased from $2.27 in the prior year to $1.52 for the three months ended July 31, 2021. This was primarily due to a significant charge of $0.9 billion related to net losses from fair value changes in equity investments, which was recorded in 'Other gains and losses'.

Walmart demonstrated improved operating discipline, with operating expenses as a percentage of net sales decreasing by 81 basis points for the quarter. This improvement was attributed to growth in net sales, lower incremental COVID-19 related costs compared to the previous year, and the absence of depreciation/amortization for divested operations. These benefits were partially offset by increased wage investments in the Walmart U.S. segment.

Walmart is strategically allocating capital towards supply chain, customer-facing initiatives, and technology, while reducing investment in new store openings. Capital expenditures increased year-over-year, reflecting these priorities. The company also continues to return capital to shareholders through dividends and an active share repurchase program, with $15.2 billion remaining authorization as of July 31, 2021.