10-QPeriod: Q3 FY2024

Walmart Inc. Quarterly Report for Q3 Ended Oct 31, 2023

Filed November 30, 2023For Securities:WMT

Summary

Walmart Inc. reported solid financial results for the third quarter ended October 31, 2023, with total revenues increasing by 5.2% to $160.8 billion year-over-year. This growth was driven by a 4.6% increase in comparable store sales in the U.S. and contributions from Walmart International and Sam's Club segments. The company saw a significant improvement in profitability, with operating income soaring by 130% to $6.2 billion and operating margin expanding by 211 basis points to 3.9%. This enhanced profitability was largely due to the absence of significant one-time legal settlement charges incurred in the prior year's quarter. For the nine-month period, total revenues grew by 6.1% to $474.7 billion, and net income attributable to Walmart surged to $10.0 billion, a substantial increase from $5.4 billion in the prior year. This performance highlights Walmart's ability to navigate inflationary pressures and deliver value to customers while improving operational efficiency and profitability. The company continues to invest in strategic areas such as supply chain, technology, and customer-facing initiatives, underpinning its commitment to long-term growth and shareholder returns.

Financial Highlights

49 data points
Beta

Revenue

$159.44B

24.0% Gross Margin

Net Income

$453.00M

0.3% Net Margin

EPS (Diluted)

$0.06

Total Assets

$259.17B

Cash & Equivalents

$12.29B

Free Cash Flow

-$4.64B

Financial Statements
Beta
Revenue$159.44B
Cost of Revenue$121.18B
Gross Profit$38.26B
SG&A Expenses$33.42B
Operating Income$6.20B
Interest Expense$572.00M
Net Income$453.00M
EPS (Basic)$0.06
EPS (Diluted)$0.06
Shares Outstanding (Basic)8.08B
Shares Outstanding (Diluted)8.11B

Key Highlights

  • 1Total revenues for the third quarter increased by 5.2% to $160.8 billion, driven by strong comparable sales growth.
  • 2U.S. comparable store sales grew by 4.6%, indicating robust performance in its core market.
  • 3Operating income surged by 130% to $6.2 billion, and operating margin improved to 3.9%, primarily due to the lapping of significant prior-year legal settlement charges.
  • 4Net income attributable to Walmart for the nine months reached $10.0 billion, a significant improvement from $5.4 billion in the prior year.
  • 5The company continues to invest in strategic capital expenditures, with $14.7 billion spent on supply chain, customer-facing initiatives, technology, and store remodels for the nine-month period.
  • 6Free cash flow generation remained strong, with $4.3 billion generated in the first nine months of the fiscal year, an increase of $0.7 billion year-over-year.
  • 7Walmart declared an annual dividend of $2.28 per share for fiscal year 2024, an increase from $2.24 in fiscal year 2023.

Frequently Asked Questions

The significant increase in profitability, particularly the surge in operating income, was primarily driven by the absence of substantial one-time opioid-related legal settlement charges that were recorded in the third quarter of the previous fiscal year. This 'lapping' effect made the year-over-year comparison appear highly favorable.

Walmart U.S. demonstrated strong performance with a 4.6% increase in comparable store sales for the quarter, driven by growth in transactions and average ticket, especially in grocery and health and wellness. Walmart International also showed robust growth with net sales up 10.8%, benefiting from positive comparable sales across most markets and favorable currency exchange rates, though partially offset by the timing shift of a major sales event.

Walmart's strategy focuses on allocating capital to higher-return areas, primarily investing in automation for eCommerce, supply chain enhancements, and store and club improvements. For the first nine months of fiscal 2024, capital expenditures totaled $14.7 billion, directed towards these strategic initiatives.

Walmart has reached settlement agreements with all 50 states, the District of Columbia, Puerto Rico, and three other U.S. territories, resolving substantially all opioid-related lawsuits brought by state and local governments. The Settlement Framework became effective on September 6, 2023, and the company has paid substantially all of the accrued liability for these settlements. However, other opioid-related litigation, including a DOJ civil complaint and securities class actions, remain ongoing.