Why did GAAP EPS increase so sharply from $0.06 to $0.57?

The prior-year quarter included $4.75 billion in other losses, mainly from fair value declines in equity investments, which reduced EPS to $0.06. This quarter's other losses were only $132 million, so reported profitability rose substantially. Management's adjusted EPS, which strips out investment gains and losses, grew a more representative 13.7% to $0.58.

Has Walmart changed its full-year outlook?

Yes, guidance was raised. Constant-currency net sales growth is now expected at 4.8% to 5.1% (versus 3.75% to 4.75% in August), adjusted operating income growth at 8.5% to 9.25% (versus 6.5% to 8.0%), and adjusted EPS at $2.42 to $2.47 (versus $2.35 to $2.43). The effective tax rate is now expected to be about 24.5%.

Are there any near-term headwinds investors should watch in Q4?

Yes. The timing shift of Flipkart's Big Billion Days event out of Q4 will weigh on International growth in the fourth quarter. Sam's Club associate wage investments, effective November 2, will also affect Q4 operating income growth. Management also noted that operating expenses deleveraged in Q3 due partly to hurricane-related recovery costs and higher marketing spend.

How is Walmart's cash generation and capital spending trending?

Year-to-date operating cash flow rose to $22.9 billion, up $3.9 billion, mainly from higher operating income and lapping prior-year opioid payments, partly offset by higher inventory purchases. Free cash flow reached $6.2 billion, up $1.9 billion, even though capital expenditures rose $2.0 billion to $16.7 billion to fund strategic investments. Walmart also repurchased $3.0 billion of stock year-to-date.

What drove the strength in eCommerce and advertising?

Global eCommerce sales grew 27%, led by store-fulfilled pickup and delivery and marketplace growth. In Walmart U.S., store-fulfilled delivery rose nearly 50%, marketplace grew 42%, and Walmart Connect advertising grew 26%. Global advertising grew 28%. Management also cited a roughly 40% reduction in net delivery cost per order, which helped eCommerce margins and reduced eCommerce losses.

WMT 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 19, 2024. Cited figures are marked; the original filing is the authoritative source.

Walmart reported third-quarter fiscal 2025 results (quarter ended October 31, 2024) showing broad-based strength: consolidated revenue rose 5.5% to $169.6 billion^a (6.2% in constant currency), operating income grew 8.2% to $6.7 billion (9.8% in constant currency), and GAAP diluted EPS was $0.57 versus $0.06 a year earlier, while adjusted EPS of $0.58 was up 13.7%.

Growth was led by Walmart U.S., where comparable sales rose 5.3% with eCommerce up 22%, and by Walmart International, where net sales grew 12.4% in constant currency, helped partly by the timing shift of Flipkart's Big Billion Days event from Q4 into Q3. Sam's Club U.S. comparable sales (ex-fuel) accelerated to 7.0%, and global eCommerce grew 27%. The year-over-year GAAP EPS improvement is largely a function of the prior-year quarter's $4.75 billion^b in other losses on equity investments, which fell to $132 million this quarter.

For the balance sheet and cash flow, year-to-date operating cash flow reached $22.9 billion^c (up $3.9 billion) and free cash flow was $6.2 billion (up $1.9 billion), though capital expenditures rose $2.0 billion to support strategic investments. Inventory declined 1.0% to $63.3 billion while in-stock levels remained healthy.

Management raised FY25 guidance: constant-currency net sales growth is now expected at 4.8% to 5.1% (up from 3.75% to 4.75%), adjusted operating income growth at 8.5% to 9.25% (up from 6.5% to 8.0%), and adjusted EPS at $2.42 to $2.47^d (up from $2.35 to $2.43). Investors should note that the Q4 outlook includes headwinds from the timing shift of Flipkart's sales event and associate wage investments at Sam's Club effective November 2, and that Q3 operating expense deleverage was 19 basis points as a percentage of sales.

02—Key points

Key Highlights

Consolidated revenue up 5.5% to $169.6B (6.2% constant currency); operating income up 8.2% to $6.7B (9.8% constant currency), ahead of net sales growth in constant currency of 6.1%.
GAAP diluted EPS of $0.57 vs. $0.06 prior year; adjusted EPS of $0.58, up 13.7%, excluding a $0.01 net loss on equity and other investments.
FY25 guidance raised: net sales (cc) growth to 4.8%–5.1%, adjusted operating income (cc) growth to 8.5%–9.25%, and adjusted EPS to $2.42–$2.47.
Walmart U.S. comparable sales up 5.3% with eCommerce up 22%, Walmart Connect advertising up 26%, and operating income up 9.1% to $5.4B.
Year-to-date operating cash flow of $22.9B (up $3.9B) and free cash flow of $6.2B (up $1.9B), with capex up $2.0B to support investment strategy.
Walmart International net sales up 12.4% (cc) to $31.5B, partly benefiting from Flipkart's Big Billion Days shifting into Q3; Q4 growth will be affected by this timing.
Balance sheet: cash of $10.0B, total debt of $47.3B, inventory down 1.0% to $63.3B, and $13.5B remaining under the share repurchase authorization.

03—Questions

Frequently Asked Questions

Why did GAAP EPS increase so sharply from $0.06 to $0.57?
The prior-year quarter included $4.75 billion in other losses, mainly from fair value declines in equity investments, which reduced EPS to $0.06. This quarter's other losses were only $132 million, so reported profitability rose substantially. Management's adjusted EPS, which strips out investment gains and losses, grew a more representative 13.7% to $0.58.
Has Walmart changed its full-year outlook?
Yes, guidance was raised. Constant-currency net sales growth is now expected at 4.8% to 5.1% (versus 3.75% to 4.75% in August), adjusted operating income growth at 8.5% to 9.25% (versus 6.5% to 8.0%), and adjusted EPS at $2.42 to $2.47 (versus $2.35 to $2.43). The effective tax rate is now expected to be about 24.5%.
Are there any near-term headwinds investors should watch in Q4?
Yes. The timing shift of Flipkart's Big Billion Days event out of Q4 will weigh on International growth in the fourth quarter. Sam's Club associate wage investments, effective November 2, will also affect Q4 operating income growth. Management also noted that operating expenses deleveraged in Q3 due partly to hurricane-related recovery costs and higher marketing spend.
How is Walmart's cash generation and capital spending trending?
Year-to-date operating cash flow rose to $22.9 billion, up $3.9 billion, mainly from higher operating income and lapping prior-year opioid payments, partly offset by higher inventory purchases. Free cash flow reached $6.2 billion, up $1.9 billion, even though capital expenditures rose $2.0 billion to $16.7 billion to fund strategic investments. Walmart also repurchased $3.0 billion of stock year-to-date.
What drove the strength in eCommerce and advertising?
Global eCommerce sales grew 27%, led by store-fulfilled pickup and delivery and marketplace growth. In Walmart U.S., store-fulfilled delivery rose nearly 50%, marketplace grew 42%, and Walmart Connect advertising grew 26%. Global advertising grew 28%. Management also cited a roughly 40% reduction in net delivery cost per order, which helped eCommerce margins and reduced eCommerce losses.

04—Continue

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