10-QPeriod: Q3 FY2023

Walmart Inc. Quarterly Report for Q3 Ended Oct 31, 2022

Filed December 1, 2022For Securities:WMT

Summary

Walmart Inc. reported mixed results for the third quarter of fiscal year 2023, ending October 31, 2022. While total revenues saw a notable increase of 8.7% year-over-year to $152.8 billion, driven by strong comparable sales across Walmart U.S. and Sam's Club segments, the company reported a consolidated net loss of $1.77 billion, a significant decline from a net income of $3.13 billion in the prior year's quarter. This loss was heavily influenced by a substantial $3.3 billion accrual for opioid-related legal settlements, impacting operating income and profitability. Despite the net loss, underlying operational performance in the U.S. and at Sam's Club demonstrated resilience with robust sales growth. However, the International segment experienced a revenue decline due to currency fluctuations and divestitures. Investors should note the significant impact of legal settlements on profitability, while also recognizing the continued strength in core U.S. sales and the strategic capital allocation towards supply chain and customer-facing initiatives, including a new substantial share repurchase program. The company's liquidity remains solid, though free cash flow saw a notable decrease due to increased capital expenditures and lower operating cash flows.

Financial Highlights

49 data points
Beta

Revenue

$151.47B

23.7% Gross Margin

Net Income

-$1.80B

-1.2% Net Margin

EPS (Diluted)

$-0.22

Total Assets

$247.66B

Cash & Equivalents

$11.59B

Free Cash Flow

$1.89B

Financial Statements
Beta
Revenue$151.47B
Cost of Revenue$115.61B
Gross Profit$35.86B
SG&A Expenses$34.51B
Operating Income$2.69B
Interest Expense$499.00M
Net Income-$1.80B
EPS (Basic)$-0.22
EPS (Diluted)$-0.22
Shares Outstanding (Basic)8.13B
Shares Outstanding (Diluted)8.13B

Key Highlights

  • 1Total revenues increased by 8.7% to $152.8 billion, driven by comparable sales growth in Walmart U.S. and Sam's Club.
  • 2Reported a consolidated net loss of $1.77 billion for the quarter, primarily due to a $3.3 billion accrual for opioid-related legal settlements.
  • 3Walmart U.S. segment net sales grew by 8.5%, with comparable sales up 8.5%, indicating strong domestic performance.
  • 4Sam's Club segment saw net sales increase by 12.8% with comparable sales up 12.8%, benefiting from membership growth and increased average ticket.
  • 5Operating expenses as a percentage of net sales increased significantly due to the opioid settlement accrual.
  • 6Free cash flow for the first nine months decreased to $3.6 billion from $7.7 billion in the prior year, impacted by lower operating cash flows and higher capital expenditures.
  • 7The company announced a new $20.0 billion share repurchase program, signaling confidence and commitment to returning capital to shareholders.

Frequently Asked Questions

The primary driver of the net loss was a significant accrual of $3.3 billion for opioid-related legal settlements, which substantially impacted operating income and overall profitability for the quarter.

Walmart U.S. showed strong performance with an 8.5% increase in net sales and 8.5% comparable sales growth. Sam's Club also performed well, with net sales up 12.8% and comparable sales up 12.8%. The Walmart International segment experienced a net sales decrease of 0.7% year-to-date due to divestitures and unfavorable currency exchange rates, although it saw a 7.1% increase in net sales for the quarter driven by positive comparable sales in most markets.

Walmart anticipates continued uncertainty due to inflation, supply chain disruptions, and volatility in employment and consumer confidence. The company is focused on strong, efficient growth, operating discipline, and strategic capital allocation. While facing cost pressures, Walmart is implementing pricing and merchandising strategies to manage costs and maintain competitive pricing.

Walmart's liquidity remains strong, with sufficient cash flow expected to fund operations, investments, dividends, and share repurchases. The company pays a quarterly dividend of $0.56 per share and recently approved a new $20.0 billion share repurchase program, indicating a commitment to shareholder returns, primarily funded through free cash flow.