10-QPeriod: Q1 FY2023

Walmart Inc. Quarterly Report for Q1 Ended Apr 30, 2022

Filed June 3, 2022For Securities:WMT

Summary

Walmart Inc.'s first quarter fiscal year 2023 report (ending April 30, 2022) shows a modest increase in total revenues, reaching $141.6 billion, up 2.4% year-over-year. This growth was primarily driven by strong comparable sales in the U.S. segments (Walmart U.S. and Sam's Club), benefiting from higher inflation impacting average ticket prices, though transaction growth was relatively flat for Walmart U.S. However, consolidated net income saw a significant decline of 25.4% to $2.1 billion, leading to diluted EPS of $0.74, down from $0.97 in the prior year. This decline was influenced by a lower gross profit margin due to increased supply chain costs and product mix shifts, as well as higher operating expenses, particularly wage costs in the U.S. The company's cash flow from operations turned negative, at $(3.8) billion, a substantial decrease from the prior year's positive $2.9 billion. This was largely attributed to increased inventory costs, lower operating income, and the timing of payments. Consequently, free cash flow was a negative $(7.3) billion. Despite these challenges, Walmart continued its strategic capital allocation, increasing investments in supply chain, customer-facing initiatives, and technology. The company also reaffirmed its liquidity position and its ability to fund operations, dividends, and share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$140.29B

23.8% Gross Margin

Net Income

$2.05B

1.5% Net Margin

EPS (Diluted)

$0.25

Total Assets

$246.14B

Cash & Equivalents

$11.82B

Free Cash Flow

-$7.30B

Financial Statements
Beta
Revenue$140.29B
Cost of Revenue$106.85B
Gross Profit$33.44B
SG&A Expenses$29.40B
Operating Income$5.32B
Interest Expense$372.00M
Net Income$2.05B
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)8.26B
Shares Outstanding (Diluted)8.29B

Key Highlights

  • 1Total revenues increased by 2.4% to $141.6 billion, driven by comparable sales growth in U.S. segments.
  • 2Consolidated net income decreased by 25.4% to $2.1 billion, with diluted EPS falling to $0.74 from $0.97.
  • 3Gross profit margin declined by 87 basis points due to higher supply chain costs and product mix.
  • 4Operating expenses as a percentage of net sales increased by 45 basis points, mainly due to higher wage costs.
  • 5Net cash used in operating activities was $(3.8) billion, a significant drop from the prior year's $2.9 billion provided.
  • 6Free cash flow was negative at $(7.3) billion, impacted by reduced operating cash flows and increased capital expenditures.
  • 7Investments in supply chain, customer-facing initiatives, and technology increased substantially.

Frequently Asked Questions

Revenue growth was primarily driven by strong comparable sales in Walmart U.S. and Sam's Club. These increases were influenced by higher inflation impacting average ticket prices, though transaction growth in Walmart U.S. was relatively flat.

Net income declined due to several factors, including a decrease in gross profit margin caused by higher supply chain costs and unfavorable product mix shifts, and an increase in operating expenses, particularly wage costs in the Walmart U.S. segment. Additionally, significant 'Other (gains) and losses' of $2.0 billion, mainly related to fair value changes in equity investments, also impacted profitability.

The company experienced a significant decline in cash flow from operations, turning negative at $(3.8) billion. This was primarily attributed to an increase in inventory costs and purchases to support sales, lower operating income, and the timing of certain payments and payables.

Walmart is strategically allocating capital, with significant increases in investments towards supply chain, customer-facing initiatives, and technology. This reflects a shift from investing in new store openings to enhancing existing operations and omni-channel capabilities.