UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended October 31, 2022. or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | --- | --- | |---------------------------------------------------------------------------------------|-----------------------------------------------------| | | | | For the transition ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended July 31, 2022. or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. | --- | --- | |---------------------------------------------------------------------------------------|-----------------------------------------------------| | | | | For the transition pe ...

Walmart Inc. (NYSE:WMT) Q2 2023 Earnings Conference Call August 16, 2022 8:00 AM ET Company Participants Dan Binder - Senior Vice President, Investor Relations Doug McMillon - Chief Executive Officer John David Rainey - Executive Vice President and Chief Financial Officer John Furner - President and Chief Executive Officer, Walmart U.S. Judith McKenna - President and Chief Executive Officer, Walmart International Kath McLay - President and Chief Executive Officer, Sam’s Club Conference Call Participants Bob ...

Summary of Walmart Inc. Conference Call Company Overview - **Company**: Walmart Inc. (NYSE: WMT) - **Industry**: Retail - **Key Participants**: Judith McKenna (President and CEO of Walmart International), Peter Benedict (Senior Retail/Consumer Products & Services Analyst at Baird) Key Points Company Size and Scope - Walmart International operates in **23 countries**, with key markets including **Canada, Mexico, India, and China** [3] - It generates **$100 billion** in revenue, accounting for **18%** of Walmart's total revenue [3] - The segment achieved approximately **$4 billion** in EBIT, representing **15%** of Walmart's total EBIT [3] Inventory Management - Walmart U.S. reported a **32%** increase in inventory, with **one-third** attributed to inflation [5][6] - Internationally, inventory is up by **20%**, also impacted by inflation [7] - Specific challenges noted in China due to COVID-19 lockdowns, affecting inventory levels and operations [7][39] International Strategy - The focus is on **long-term sustainable growth** and **risk diversification** across different markets [11] - Walmart has undergone a **portfolio rationalization** to concentrate resources on markets with the most potential [10] - The strategy emphasizes **strong local businesses** powered by Walmart's global scale [12] Market Performance - International operations reported a **10% growth** in the last quarter, attributed to effective portfolio management [14] - **Walmex** (Mexico) contributes approximately **40%** of Walmart International's total revenue [16] Consumer Behavior Insights - Inflation is a concern across all markets, with Chile experiencing the highest rates and China the lowest [22] - Consumer confidence has remained relatively stable, with remittances in Mexico holding strong [22][23] Investment in India - Walmart's investment in **Flipkart** has been successful, with the company achieving a **$20 billion** valuation and raising **$38 billion** last year [28] - Flipkart is expanding into new revenue streams, including advertising and travel [31][32] - The company is focused on building a **co-commerce** ecosystem and enhancing profitability through alternative profit pools [34] Operations in China - Walmart China operates under a challenging environment due to lockdowns, with significant operational adjustments made [37][39] - The company is focusing on fresh food delivery and adapting its business model to meet current demands [39] Best Practices and Technology Sharing - Walmart International shares best practices, innovations, and technology across markets to enhance overall performance [42] - The company is testing various automation technologies in Canada and Mexico to improve efficiency [42] Financial Outlook - Walmart International aims for balanced capital allocation across markets, focusing on areas with the highest return potential [45] - The company is committed to long-term sustainable growth, both in revenue and profitability [46] ESG Initiatives - Walmart emphasizes the importance of **ESG** (Environmental, Social, and Governance) practices in its operations, which are critical for maintaining market reputation [48] - Initiatives include sustainability efforts, job creation, and community support across various markets [49][50] Additional Insights - The company is leveraging its experience in inflationary environments to prepare for potential economic challenges [24] - Walmart's flexible ownership structure allows for tailored approaches in different markets, enhancing operational effectiveness [19][20]

Sales Performance - Comparable sales in the U.S. increased by 6.0% for the three months ended April 30, 2022, compared to the same period in the previous fiscal year[58]. - Walmart U.S. segment had comparable sales growth of 4.0% driven by growth in average ticket and strong sales in grocery[58]. - Sam's Club segment experienced a 17.4% increase in comparable sales for the three months ended April 30, 2022, benefiting from growth in transactions and average ticket[58]. - Walmart U.S. segment net sales increased by $3.7 billion or 4.0% for the three months ended April 30, 2022, totaling $96,904 million[73]. - Sam's Club segment net sales increased by $2.9 billion or 17.5% for the three months ended April 30, 2022, driven by comparable sales growth of 17.4%[76]. - Walmart International segment net sales decreased by $3.5 billion or 13.0% for the three months ended April 30, 2022, compared to the same period in the previous fiscal year[75]. Financial Performance - Consolidated net income for the three months ended April 30, 2022, was $2,103 million, a decrease of $0.7 billion compared to the same period in the previous fiscal year[72]. - Total revenues increased by $3.3 billion or 2.4% for the three months ended April 30, 2022, reaching $141,569 million[72]. - Operating income for the three months ended April 30, 2022, was $5,318 million, down from $6,909 million in the same period last year[72]. - Operating income for Walmart International segment decreased by $0.4 billion to $772 million, representing 3.2% of net sales for the three months ended April 30, 2022[75]. - Gross profit margin as a percentage of net sales decreased to 23.8% for the three months ended April 30, 2022, down from 24.7% in the previous year[72]. - Gross profit rate for Sam's Club segment decreased by 216 basis points for the three months ended April 30, 2022, primarily due to higher supply chain costs and inflation[77]. Cash Flow and Capital Expenditures - Free cash flow for the three months ended April 30, 2022, was negative $7,297 million, a decline of $7.9 billion compared to the same period in the prior year[70]. - Capital expenditures totaled $3,539 million for the three months ended April 30, 2022, up from $2,214 million in the same period last year[62]. - Net cash used in operating activities was $3.8 billion for the three months ended April 30, 2022, compared to net cash provided of $2.9 billion in the same period of 2021[79]. - Net cash used in investing activities was $4.6 billion for the three months ended April 30, 2022, compared to net cash provided of $5.9 billion in the same period of 2021[81]. - Net cash provided by financing activities was $5.3 billion for the three months ended April 30, 2022, compared to net cash used of $5.4 billion in the same period of 2021[83]. Expenses and Taxation - Operating, selling, general and administrative expenses increased by 4.5% to $29,404 million for the three months ended April 30, 2022[61]. - Operating expenses as a percentage of net sales increased by 45 basis points for the three months ended April 30, 2022, primarily due to increased wage costs[72]. - The effective income tax rate for the three months ended April 30, 2022, was 27.5%, compared to 26.9% for the same period in the previous fiscal year[72]. Strategic Focus and Outlook - The company is focusing on strong, efficient growth by increasing comparable store and club sales and accelerating eCommerce sales growth[57]. - Strategic capital allocation is shifting towards supply chain, customer-facing initiatives, and technology, with less emphasis on new store openings[62]. - The company anticipates continued uncertainty in business and the global economy due to various external factors, including inflation and supply chain disruptions[55]. Shareholder Returns and Credit Ratings - The Board of Directors approved a fiscal 2023 annual dividend of $2.24 per share, an increase from $2.20 per share in fiscal 2022[85]. - As of April 30, 2022, authorization for $8.3 billion of share repurchases remained under the current share repurchase program[86]. - The company maintains strong credit ratings with Standard & Poor's at A-1+ for commercial paper and AA for long-term debt, Moody's at P-1 and Aa2, and Fitch at F1+ and AA[91]. Legal and Regulatory Matters - The company has ongoing legal proceedings related to opioid dispensing claims, with over 2,150 cases included in the National Prescription Opiate Litigation as of May 20, 2022[98]. - The company is involved in a civil complaint filed by the U.S. Department of Justice regarding alleged violations of the Controlled Substances Act related to opioid distribution[98]. - The company is responding to a show cause notice from India's Directorate of Enforcement regarding alleged violations of Foreign Direct Investment rules prior to its acquisition of Flipkart[100]. - The company is defending against a lawsuit filed by the California Attorney General regarding the management of hazardous waste consumer products, with potential penalties exceeding $1 million[101]. - There has been no material change in the risk factors affecting the company's operations as disclosed in the Annual Report for the fiscal year ended January 31, 2022[103].

Financial Data and Key Metrics Changes - The company reported strong top-line sales for Q1 2023, exceeding expectations across all segments, but bottom-line results fell short due to increased wage expenses, inventory costs, and fuel costs [5][11][39] - Operating income declined by 20% year-over-year, with adjusted EPS also down 20% to $1.30 [42] - Operating cash flow was negative $3.8 billion, attributed to higher inventory levels and lower operating income [43] Business Line Data and Key Metrics Changes - Walmart U.S. comp sales excluding fuel grew by 3%, with a 9% increase on a two-year stack, driven by strong food sales [44] - E-commerce sales grew by 1% in Q1, impacted by a fire at a fulfillment center, but the company managed to fulfill orders through other facilities [24][25] - Sam's Club U.S. reported comp sales growth of 10.6% excluding fuel and tobacco, with e-commerce sales up 22% [50][98] Market Data and Key Metrics Changes - International sales increased by 8% in constant currency, with Mexico and Canada leading growth [47] - E-commerce sales in constant currency grew by 22%, with significant growth in markets like Mexico (20% growth) and Canada (7.7% growth) [48][49] - The company noted a shift in consumer behavior, with increased private brand penetration due to inflation pressures [40][109] Company Strategy and Development Direction - The company is focused on a diversified approach to profitability, emphasizing the importance of its flywheel strategy, which includes marketplace growth, fulfillment services, and advertising income [16][17] - Walmart is committed to maintaining a top-line growth of 4% and profit growth greater than 4% despite current economic challenges [16] - The company is expanding its health and wellness initiatives, including new Walmart Health locations and partnerships in financial services [19][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unusual inflation levels in the U.S. and the impact on both top and bottom lines, but expressed confidence in continued strong sales performance [12][13] - The company raised its sales guidance for the year, expecting consolidated net sales growth of 4.5% to 5% [53] - Management indicated that while Q1 profits were lower than expected, they remain focused on serving customers and shareholders [56] Other Important Information - The company experienced significant supply chain disruptions and cost increases due to external factors, including the war in Ukraine and COVID-19 impacts [39][41] - The company is actively managing inventory levels, which increased by 33% due to inflation and aggressive buying strategies [47][67] Q&A Session Summary Question: Assessment of consumer health - Management noted that consumer behavior varies widely, with some segments showing strength while others indicate a shift towards private brands [57][59] Question: Inventory management and markdowns - Management expressed confidence in managing inventory levels and indicated that rollbacks are being well received by customers [64][68] Question: Vendor negotiations and cost management - Management emphasized the importance of keeping costs low and maintaining value for customers, while also managing supplier relationships [70][72] Question: Changes in consumer basket and inventory - Management observed a mix shift towards grocery and noted that while units per basket were down, ticket sizes increased [78][80] Question: E-commerce outlook and advertising growth - Management reported a 1% increase in e-commerce sales and highlighted strong growth in the advertising business, which grew over 30% [96][100] Question: Inflation levels and pricing strategy - Management indicated double-digit inflation in food and discussed strategies to manage costs while maintaining competitive pricing [109][110]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-K ___________________________________________ ☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 31, 2022, or ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-06991. ___________________________________________ WALMART INC. (Exact name of registrant ...