01—Abstract
Summary
Summary of the 10-Q filed November 30, 2023. Cited figures are marked; the original filing is the authoritative source.
Walmart Inc. reported solid financial results for the third quarter ended October 31, 2023, with total revenues increasing by 5.2% to $160.8 billiona 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 billionb 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 billionc, 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.
02—Key points
Key Highlights
- Total revenues for the third quarter increased by 5.2% to $160.8 billion, driven by strong comparable sales growth.
- U.S. comparable store sales grew by 4.6%, indicating robust performance in its core market.
- Operating 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.
- Net income attributable to Walmart for the nine months reached $10.0 billion, a significant improvement from $5.4 billion in the prior year.
- The 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.
- Free 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.
- Walmart declared an annual dividend of $2.28 per share for fiscal year 2024, an increase from $2.24 in fiscal year 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Walmart Inc. kept $0.00.
- Revenue$159.44B100.0%
- Cost of revenue−$121.18B76.0%
- Gross profit$38.26B24.0%
- Operating costs−$32.05B20.1%
- Operating income$6.20B3.9%
- Interest, other & tax−$5.75B3.6%
- Net income$453.0M0.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 30, 2023Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $159.44B$151.47B | +5.3% |
| Cost of Revenue | $121.18B$115.61B | +4.8% |
| Gross Profit | $38.26B$35.86B | +6.7% |
| SG&A Expenses | $33.42B$34.51B | −3.1% |
| Operating Income | $6.20B$2.69B | +130.1% |
| Interest Expense | $572.00M$499.00M | +14.6% |
| Net Income | $453.00M-$1.80B | +125.2% |
| EPS (Basic) | $0.06$-0.22 | +127.3% |
| EPS (Diluted) | $0.06$-0.22 | +127.3% |
| Shares Outstanding (Basic) | 8.08B8.13B | −0.7% |
| Shares Outstanding (Diluted) | 8.11B8.13B | −0.3% |
05—Questions
Frequently Asked Questions
What was the primary driver behind Walmart's significant increase in profitability this quarter?
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.
How did Walmart's U.S. and International segments perform in terms of sales?
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.
What is Walmart's strategy for capital allocation and investment?
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.
Can you provide an update on Walmart's legal matters, specifically the opioid litigation?
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.
06—Continue