8-K
Walmart Inc. (WMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported)
November 15, 2022
Walmart Inc.
(Exact name of registrant as specified in its charter)
| DE | 001-06991 | 71-0415188 |
|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
702 S.W. 8th Street
Bentonville, AR 72716-0215
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code
(479) 273-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.10 per share | WMT | NYSE |
| 2.550% Notes Due 2026 | WMT26 | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
In accordance with Item 2.02 of Form 8-K of the Securities and Exchange Commission (the "SEC"), Walmart Inc., a Delaware corporation (the "Company"), is furnishing to the SEC a press release that the Company will issue on November 15, 2022 (the "Press Release") and a financial presentation that will be first posted by the Company on the Company’s website at http://stock.walmart.com on November 15, 2022 (the "Financial Presentation"). The Press Release and the Financial Presentation will disclose information regarding the Company's results of operations for the three and nine months ended October 31, 2022, and the Company's financial condition as of October 31, 2022.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, which are furnished herewith pursuant to and relate to this Item 2.02, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise be subject to the liabilities of Section 18 of the Exchange Act. The information in this Item 2.02 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 hereto shall not be incorporated by reference into any filing or other document filed by the Company with the SEC pursuant to the Securities Act of 1933, as amended, the rules and regulations of the SEC thereunder, the Exchange Act, or the rules and regulations of the SEC thereunder except as shall be expressly set forth by specific reference in such filing or document.
Item 7.01. Regulation FD Disclosure.
The Company has agreed to financial amounts and payment terms to resolve substantially all opioids-related lawsuits filed against the Company, as well as all potential claims that could be made against the Company, by states and political subdivisions (the “State Settlement Framework”) and tribes (the “Tribal Settlement Framework”). The Company will issue a press release on November 15, 2022 regarding the Settlement Frameworks, a copy which is furnished as Exhibit 99.3 to this report.
Both frameworks provide for the possibility of settling substantially all of the opioid claims that have been or could be made against it by states, political subdivisions, and tribes for up to approximately $3.1 billion, which includes amounts for remediation of alleged harms as well as attorneys’ fees and costs (the “Settlement Amount”). The Settlement Amount includes some, but not all amounts, from previously agreed recent settlements by the Company. If a sufficient number of states and political subdivisions agree within prescribed deadlines to participate in the State Settlement Framework (collectively, the “Settling States”), the Company would expect to pay up to the full Settlement Amount attributable to the Settling States. In the event a sufficient number of Settling States participate in the State Settlement Framework and provided that all other applicable conditions of the State Settlement Framework are satisfied, then the Company would expect payments to the Settling States to begin as early as the second quarter of its fiscal year ending January 31, 2024 (“fiscal 2024”). The Settling States that achieve complete local government participation in the initial sign-up period will receive all of their settlement funds the same year. The Settling States that achieve high levels of local government participation will also receive most of the settlement funds to which they become entitled in the same year. Similarly, if a sufficient number of tribes (excluding Cherokee Nation) agree within prescribed deadlines to participate in the Tribal Settlement Framework (collectively, the “Settling Tribes”) and all other applicable conditions of the Tribal Settlement Framework are satisfied, then the Company would expect payments to the Settling Tribes could begin as early as the fourth quarter of its fiscal year ending January 31, 2023 (“fiscal 2023”) and could be completed during either fiscal 2023 or fiscal 2024. The Settlement Frameworks include no admission of wrongdoing or liability by the Company.
The State Settlement Framework is contingent on: (1) a sufficient number of states agreeing to the State Settlement Framework following a notice period; and (2) following a notice period, a sufficient number of political subdivisions, including those that have not sued the Company, agreeing to the Settlement Framework or otherwise having their claims foreclosed. The Tribal Settlement Framework is contingent on a sufficient number of tribes agreeing to the Tribal Settlement Framework. The Company cannot predict if or when the Settlement Frameworks will be finalized. The Company will continue to vigorously defend against any litigation not covered or otherwise extinguished by the Settlement Frameworks. The Company continues to believe it has strong legal defenses and appellate arguments in those cases.
In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.3 hereto, which is furnished herewith pursuant to and relate to this Item 7.01, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of Section 18 of the Exchange Act. The information in this Item 7.01 of this Current Report on Form 8-K and Exhibit 99.3 hereto shall not be incorporated by reference into any filing or other document filed by the Company with the SEC pursuant to the Securities Act of 1933, as amended, the rules and regulations of the SEC thereunder, the Exchange Act, or the rules and regulations of the SEC thereunder except as shall be expressly set forth by specific reference in such filing or document.
Cautionary Note Regarding Forward-Looking Statements
All statements in this report that are not historical including, without limitation, those regarding the expected finalization of the Settlement Frameworks and payments anticipated to be made pursuant to the Settlement Frameworks, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “achieve,” “as early as,” “could be,” “could begin,” “if,” “in the event,” “is contingent on,” “would expect,” “will,” “will receive,” “likely,” “intend,” “plan,” “aim,” “continue,” “believe,” “seek,” “anticipate,” “upcoming,” “may,” “provide for the possibility,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, known or unknown, that could cause actual results to vary materially from those indicated or anticipated. These risks, assumptions and uncertainties include those described in Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, and in other documents that we file or furnish with the SEC. If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. All forward-looking statements we make or that are made on our behalf are qualified by these cautionary statements. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.
We do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| The following documents are furnished as exhibits to this Current Report on Form 8-K: | |
|---|---|
| 99.1 | Press Release regarding financial results for the third quarter of fiscal year ending January 31, 2023 |
| 99.2 | Financial Presentation |
| 99.3 | Press Release regarding nationwide opioid litigation settlement frameworks |
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 15, 2022
| WALMART INC. | |
|---|---|
| By: | /s/ Gordon Y. Allison |
| Name: | Gordon Y. Allison |
| Title: | Senior Vice President, Office of the Corporate Secretary, and Chief Counsel for Finance and Governance |
Document
Company delivers strong revenue growth of 8.7% with strength across segments
Walmart U.S. grew comp sales1 8.2%, with unit growth in food, and eCommerce up 16%
Q3 FY23 GAAP EPS of ($0.66); Adjusted EPS2 of $1.50
Company raises full-year outlook on strong results for Q3
Company announces new $20 billion share repurchase authorization
Third-quarter highlights
| Company delivered strong revenue growth globally, with strength in Walmart U.S., Sam’s Club U.S., Flipkart, and Walmex. Total revenue was 152.8 billion, up 8.7%, or 9.8% in constant currency2. |
|---|
| Walmart U.S. comp sales1 grew 8.2% and 17.4% on a two-year stack. eCommerce growth was 16% and 24% on a two-year stack. Continued to gain market share in grocery. |
| Sam’s Club comp sales1 increased 10.0%, and 23.9% on a two-year stack. Membership income increased 8.0% with member count reaching an all-time high. |
| Walmart International net sales were 25.3 billion, an increase of 1.7 billion, or 7.1%, negatively affected by 1.5 billion from currency fluctuations. Segment operating income led by double-digit growth for Walmex. |
| Global advertising business3 grew over 30%, led by 40% at Walmart Connect in the U.S. and strength in Flipkart Ads. |
| Consolidated gross profit rate declined 89 basis points, primarily due to markdowns and mix of sales in the U.S., an inflation-related LIFO charge at Sam’s Club, and the timing of Flipkart’s annual event, The Big Billion Days. |
| Consolidated operating expenses as a percentage of net sales increased 144 basis points due to charges of 3.3 billion related to opioid legal settlements. Adjusted operating expenses as a percentage of net sales4 decreased 75 basis points, primarily due to strong sales growth and lower Covid-related costs. |
| Consolidated operating income was 2.7 billion, a decrease of 53.5%, including the legal charges described above. Adjusted operating income2 was 6.0 billion, an increase of 3.9%. |
| Adjusted EPS2 of 1.50 excludes the effects, net of tax, of 1.11 from net losses on equity and other investments and 1.05 from charges related to opioid legal settlements. |
| Subsequent to the third quarter the Company approved a new 20 billion share repurchase authorization replacing its existing authorization, which had approximately 1.9 billion remaining at the end of Q3. |
All values are in US Dollars.
1 Comp sales for the 13-week period ended October 28, 2022 compared to the 13-week period ended October 29, 2021, and excludes fuel. See Supplemental Financial Information for additional information.
2 See additional information at the end of this release regarding non-GAAP financial measures.
3 Our global advertising business is recorded either in net sales or as a reduction to cost of sales, depending on the nature of the advertising arrangement.
4 Adjusted operating expenses as a percentage of net sales excludes a 219 basis point impact for the opioid legal charges reflected in the non-GAAP reconciliation of adjusted operating income at the end of this release.
| NYSE: WMT | November 15, 2022 | stock.walmart.com |
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Key results
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
|
Q3 FY23 | Q3 FY22 | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $152.8 | $140.5 | $12.3 | 8.7% | |||||||
| Revenue (constant currency)1 | $154.3 | $140.5 | $13.8 | 9.8% | |||||||
| Operating income | $2.7 | $5.8 | -$3.1 | -53.5% | |||||||
| Operating income (constant currency)1 | $2.7 | $5.8 | -$3.1 | -52.8% | |||||||
| Adjusted operating income (constant currency)1 | $6.1 | $5.8 | $0.3 | 4.6% | Free Cash Flow1 | YTD FY23 | $ Change | Returns to Shareholders | Q3 FY23 | % Change | |
| --- | --- | --- | --- | --- | --- | ||||||
| Operating cash flow | $15.7 | -$0.6 | Dividends | $1.5 | -1.1% | ||||||
| Capital expenditures | $12.1 | $3.5 | Share repurchases2 | $3.0 | 36.6% | ||||||
| Free cash flow1 | $3.6 | -$4.1 | Total | $4.5 | 21.0% |
Fourth quarter and Fiscal Year 2023 guidance
The following guidance reflects the company’s expectations for Q4 and fiscal year 2023 and is provided on a non-GAAP basis as the company cannot predict certain elements which are included in reported GAAP results, such as the changes in fair value of the company’s equity and other investments. Growth rates reflect an adjusted basis for prior year results. Fiscal year 2023 operating income is adjusted for charges related to opioid legal settlements in the third quarter. The company’s guidance assumes a generally stable consumer in the U.S., continued pressure from inflation and mix of products and formats globally.
Fourth quarter
•Consolidated net sales growth of about 3.0%, negatively affected by approximately $1.3 billion from currency fluctuations.
•Walmart U.S. comp sales, excluding fuel, of about 3.0%.
•Consolidated operating income increase 1.0% to decline 1.0%
•Adjusted earnings per share decline of 3.0% to 5.0%.
Fiscal Year 2023
The company raises full-year outlook to reflect third quarter performance:
•Consolidated net sales growth of about 5.5%. Excluding divestitures3, consolidated net sales growth of about 6.5%. Based on current exchange rates, the company expects a headwind of about $4.1 billion for the year.
•Walmart U.S. comp sales growth, excluding fuel, of about 5.5%.
•Consolidated adjusted operating income decline of 6.5% to 7.5%, which improved from the company’s prior guidance of a decline of 9.0% to 11.0% and reflects better performance in the third quarter. Excluding divestitures3, consolidated adjusted operating income decline of 5.5% to 6.5%.
•Adjusted earnings per share decline of 6.0% to 7.0%. Excluding divestitures3, adjusted earnings per share decline of 5.0% to 6.0%.
1 See additional information at the end of this release regarding non-GAAP financial measures.
2 $1.9 billion remaining of $20 billion authorization approved in February 2021. The company repurchased approximately 22 million shares in Q3 fiscal 2023.
3 We completed the sale of our operations in the U.K. and Japan in the first quarter of fiscal 2022.
| NYSE: WMT | November 15, 2022 | stock.walmart.com |
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Segment results
(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)
 U.S. |
Q3 FY23 | Q3 FY22 | Change | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $104.8 | $96.6 | $8.2 | 8.5% | |||||||
| Comp sales (ex. fuel)2 | 8.2% | 9.2% | NP | NP | |||||||
 |
Transactions | 2.1% | 5.7% | NP | NP | ||||||
|
Average ticket | 6.0% | 3.3% | NP | NP | ||||||
|
eCommerce contribution | ~80 bps | < 10 bps | NP | NP | ||||||
| Operating income | $5.1 | $4.9 | $0.2 | 4.8% |  |
Q3 FY23 | Q3 FY22 | Change | |||
| --- | --- | --- | --- | --- | |||||||
| Net sales | $25.3 | $23.6 | $1.7 | 7.1% | |||||||
| Net sales (constant currency)1 | $26.8 | $23.6 | $3.1 | 13.3% | |||||||
| Operating income | $0.9 | $0.9 | $— | -1.1% | |||||||
| Operating income (constant currency)1 | $0.9 | $0.9 | $— | 3.2% |  |
Q3 FY23 | Q3 FY22 | Change | |||
| --- | --- | --- | --- | --- | --- | ||||||
| Net sales | $21.4 | $19.0 | $2.4 | 12.8% | |||||||
| Comp sales (ex. fuel)2 | 10.0% | 13.9% | NP | NP | |||||||
|
Transactions | 4.8% | 11.1% | NP | NP | ||||||
|
Average ticket | 4.9% | 2.6% | NP | NP | ||||||
|
eCommerce contribution | ~120 bps | ~170 bps | NP | NP | ||||||
| Operating income | $0.6 | $0.5 | $0.1 | 18.3% |
1 See additional information at the end of this release regarding non-GAAP financial measures.
2 Comp sales for the 13-week period ended October 28, 2022 compared to the 13-week period ended October 29, 2021, and excludes fuel. See Supplemental Financial Information for additional information.
NP - Not provided
About Walmart
Walmart Inc. (NYSE: WMT) helps people around the world save money and live better - anytime and anywhere - in retail stores, online, and through their mobile devices. Each week, approximately 230 million customers and members visit more than 10,500 stores and numerous eCommerce websites under 46 banners in 24 countries. With fiscal year 2022 revenue of $573 billion, Walmart employs approximately 2.3 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting https://corporate.walmart.com, on Facebook at https://facebook.com/walmart, on Twitter at https://twitter.com/walmart, and on LinkedIn at https://www.linkedin.com/company/walmart/.
| Investor Relations contact<br>Steph Wissink<br>Stephanie.Wissink@walmart.com | Media Relations contact<br>Randy Hargrove<br>(800) 331-0085 | | --- | --- || NYSE: WMT | November 15, 2022 | stock.walmart.com | | --- | --- | --- |
4
Forward-Looking Statements
This release and related management commentary contains statements or may include or may incorporate by reference Walmart management’s guidance regarding adjusted earnings per share, consolidated net sales, consolidated operating income and consolidated adjusted operating income, capital expenditures, share repurchases, Walmart’s effective tax rate for the fiscal year ending January 31, 2023, and comparable sales, among other items. Walmart believes such statements may be deemed to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act") and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other federal securities laws. Assumptions on which such forward-looking statements are based are also forward-looking statements. Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our consolidated, or one of our segment's or business’, economic performance or results of operations for future periods or as of future dates or events or developments that may occur in the future or discuss our plans, objectives or goals. Our actual results may differ materially from those expressed in or implied by any of these forward-looking statements as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including: the impact of the COVID-19 pandemic on our business and the global economy; economic, capital markets and business conditions; trends and events around the world and in the markets in which we operate; currency exchange rate fluctuations, changes in market interest rates and market levels of wages; changes in the size of various markets, including eCommerce markets; unemployment levels; inflation or deflation, generally and in particular product categories; consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels and demand for certain merchandise; the effectiveness of the implementation and operation of our strategies, plans, programs and initiatives; unexpected changes in our objectives and plans; the impact of acquisitions, investments, divestitures, and other strategic decisions; our ability to successfully integrate acquired businesses; changes in the trading prices or fair value of certain equity investments we hold; initiatives of competitors, competitors' entry into and expansion in our markets, and competitive pressures; customer traffic and average transactions in our stores and clubs and on our eCommerce websites; the mix of merchandise we sell, the cost of goods we sell and the shrinkage we experience; our gross profit margins; the financial performance of Walmart and each of its segments, including the amounts of our cash flow during various periods; the amount of our net sales and operating expenses denominated in the U.S. dollar and various foreign currencies; commodity prices and the price of gasoline and diesel fuel; challenges with our supply chain, including disruptions and issues relating to inventory management; disruptions in seasonal buying patterns; the availability of goods from suppliers and the cost of goods acquired from suppliers; our ability to respond to changing trends in consumer shopping habits; consumer acceptance of and response to our stores, clubs, eCommerce platforms, programs, merchandise offerings and delivery methods; cyber security events affecting us and related costs and impact to the business; developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith; casualty and accident related costs and insurance costs; the turnover in our workforce and labor costs, including healthcare and other benefit costs; our effective tax rate and the factors affecting our effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law, administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations; changes in existing tax, labor and other laws and regulations and changes in tax rates including the enactment of laws and the adoption and interpretation of administrative rules and regulations; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions; adoption or creation of new, and modification of existing, governmental policies, programs, initiatives and actions in the markets in which Walmart operates and elsewhere and actions with respect to such policies, programs and initiatives; changes in accounting estimates or judgments; the level of public assistance payments; natural disasters, changes in climate, geopolitical events, global health epidemics or pandemics and catastrophic events; and changes in generally accepted accounting principles in the United States.
Our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC discuss other risks and factors that could cause actual results to differ materially from those expressed or implied by any forward-looking statement in the release and related management commentary. We urge you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this release. Walmart cannot assure you that the results reflected in or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects for or on our operations or financial performance. The forward-looking statements made today are as of the date of this release. Walmart undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
| NYSE: WMT | November 15, 2022 | stock.walmart.com |
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5
Walmart Inc.
Condensed Consolidated Statements of Income
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 31, | October 31, | |||||||||||
| (Amounts in millions, except per share data) | 2022 | 2021 | Percent Change | 2022 | 2021 | Percent Change | ||||||
| Revenues: | ||||||||||||
| Net sales | $ | 151,469 | $ | 139,207 | 8.8 | % | $ | 443,138 | $ | 416,237 | 6.5 | % |
| Membership and other income | 1,344 | 1,318 | 2.0 | % | 4,103 | 3,646 | 12.5 | % | ||||
| Total revenues | 152,813 | 140,525 | 8.7 | % | 447,241 | 419,883 | 6.5 | % | ||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 115,613 | 105,023 | 10.1 | % | 338,298 | 313,478 | 7.9 | % | ||||
| Operating, selling, general and administrative expenses | 34,505 | 29,710 | 16.1 | % | 94,076 | 86,350 | 8.9 | % | ||||
| Operating income | 2,695 | 5,792 | (53.5) | % | 14,867 | 20,055 | (25.9) | % | ||||
| Interest: | ||||||||||||
| Debt | 499 | 408 | 22.3 | % | 1,266 | 1,326 | (4.5) | % | ||||
| Finance lease obligations | 85 | 78 | 9.0 | % | 252 | 241 | 4.6 | % | ||||
| Interest income | (84) | (44) | 90.9 | % | (151) | (111) | 36.0 | % | ||||
| Interest, net | 500 | 442 | 13.1 | % | 1,367 | 1,456 | (6.1) | % | ||||
| Loss on extinguishment of debt | — | 2,410 | (100.0) | % | — | 2,410 | (100.0) | % | ||||
| Other (gains) and losses | 3,626 | (1,207) | (400.4) | % | 5,386 | 2,275 | 136.7 | % | ||||
| Income (loss) before income taxes | (1,431) | 4,147 | (134.5) | % | 8,114 | 13,914 | (41.7) | % | ||||
| Provision for income taxes | 336 | 1,015 | (66.9) | % | 2,631 | 3,607 | (27.1) | % | ||||
| Consolidated net income (loss) | (1,767) | 3,132 | (156.4) | % | 5,483 | 10,307 | (46.8) | % | ||||
| Consolidated net income attributable to noncontrolling interest | (31) | (27) | 14.8 | % | (78) | (196) | (60.2) | % | ||||
| Consolidated net income (loss) attributable to Walmart | $ | (1,798) | $ | 3,105 | (157.9) | % | $ | 5,405 | $ | 10,111 | (46.5) | % |
| Net income per common share: | ||||||||||||
| Basic net income (loss) per common share attributable to Walmart | $ | (0.66) | $ | 1.11 | (159.5) | % | $ | 1.98 | $ | 3.61 | (45.2) | % |
| Diluted net income (loss) per common share attributable to Walmart | $ | (0.66) | $ | 1.11 | (159.5) | % | $ | 1.97 | $ | 3.59 | (45.1) | % |
| Weighted-average common shares outstanding: | ||||||||||||
| Basic | 2,711 | 2,785 | 2,733 | 2,799 | ||||||||
| Diluted | 2,711 | 2,797 | 2,743 | 2,813 | ||||||||
| Dividends declared per common share | $ | — | $ | — | $ | 2.24 | $ | 2.20 |
6
Walmart Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| October 31, | January 31, | October 31, | ||||
|---|---|---|---|---|---|---|
| (Amounts in millions) | 2022 | 2022 | 2021 | |||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 11,587 | $ | 14,760 | $ | 16,111 |
| Receivables, net | 8,218 | 8,280 | 7,349 | |||
| Inventories | 64,706 | 56,511 | 57,484 | |||
| Prepaid expenses and other | 3,169 | 1,519 | 2,020 | |||
| Total current assets | 87,680 | 81,070 | 82,964 | |||
| Property and equipment, net | 97,553 | 94,515 | 92,242 | |||
| Operating lease right-of-use assets | 13,394 | 13,758 | 13,863 | |||
| Finance lease right-of-use assets, net | 4,597 | 4,351 | 4,226 | |||
| Goodwill | 28,137 | 29,014 | 28,923 | |||
| Other long-term assets | 16,295 | 22,152 | 22,633 | |||
| Total assets | $ | 247,656 | $ | 244,860 | $ | 244,851 |
| LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY | ||||||
| Current liabilities: | ||||||
| Short-term borrowings | $ | 6,811 | $ | 410 | $ | 447 |
| Accounts payable | 57,263 | 55,261 | 57,156 | |||
| Dividends payable | 1,527 | — | 1,528 | |||
| Accrued liabilities | 27,443 | 26,060 | 24,474 | |||
| Accrued income taxes | 900 | 851 | 446 | |||
| Long-term debt due within one year | 5,458 | 2,803 | 1,575 | |||
| Operating lease obligations due within one year | 1,457 | 1,483 | 1,486 | |||
| Finance lease obligations due within one year | 549 | 511 | 508 | |||
| Total current liabilities | 101,408 | 87,379 | 87,620 | |||
| Long-term debt | 33,935 | 34,864 | 36,425 | |||
| Long-term operating lease obligations | 12,658 | 13,009 | 13,095 | |||
| Long-term finance lease obligations | 4,512 | 4,243 | 4,061 | |||
| Deferred income taxes and other | 14,760 | 13,474 | 12,893 | |||
| Commitments and contingencies | ||||||
| Redeemable noncontrolling interest | 260 | — | — | |||
| Equity: | ||||||
| Common stock | 270 | 276 | 277 | |||
| Capital in excess of par value | 4,817 | 4,839 | 4,811 | |||
| Retained earnings | 77,946 | 86,904 | 85,674 | |||
| Accumulated other comprehensive loss | (10,780) | (8,766) | (8,488) | |||
| Total Walmart shareholders’ equity | 72,253 | 83,253 | 82,274 | |||
| Nonredeemable noncontrolling interest | 7,870 | 8,638 | 8,483 | |||
| Total equity | 80,123 | 91,891 | 90,757 | |||
| Total liabilities, redeemable noncontrolling interest, and equity | $ | 247,656 | $ | 244,860 | $ | 244,851 |
7
Walmart Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | ||||
|---|---|---|---|---|
| October 31, | ||||
| (Amounts in millions) | 2022 | 2021 | ||
| Cash flows from operating activities: | ||||
| Consolidated net income | $ | 5,483 | $ | 10,307 |
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 8,134 | 7,952 | ||
| Net unrealized and realized losses | 5,611 | 1,831 | ||
| Losses on disposal of business operations | — | 433 | ||
| Deferred income taxes | 28 | (1,402) | ||
| Loss on extinguishment of debt | — | 2,410 | ||
| Other operating activities | 921 | 1,057 | ||
| Changes in certain assets and liabilities, net of effects of acquisitions and dispositions: | ||||
| Receivables, net | (59) | (842) | ||
| Inventories | (9,008) | (12,663) | ||
| Accounts payable | 3,183 | 7,906 | ||
| Accrued liabilities | 1,354 | (722) | ||
| Accrued income taxes | 51 | 24 | ||
| Net cash provided by operating activities | 15,698 | 16,291 | ||
| Cash flows from investing activities: | ||||
| Payments for property and equipment | (12,061) | (8,588) | ||
| Proceeds from the disposal of property and equipment | 126 | 290 | ||
| Proceeds from disposal of certain operations, net of divested cash | — | 7,935 | ||
| Payments for business acquisitions, net of cash acquired | (730) | (248) | ||
| Other investing activities | (300) | (919) | ||
| Net cash used in investing activities | (12,965) | (1,530) | ||
| Cash flows from financing activities: | ||||
| Net change in short-term borrowings | 6,451 | 228 | ||
| Proceeds from issuance of long-term debt | 4,969 | 6,945 | ||
| Repayments of long-term debt | (1,439) | (13,010) | ||
| Premiums paid to extinguish debt | — | (2,317) | ||
| Dividends paid | (4,600) | (4,627) | ||
| Purchase of Company stock | (8,708) | (7,368) | ||
| Dividends paid to noncontrolling interest | (16) | (20) | ||
| Sale of subsidiary stock | 55 | 3,231 | ||
| Other financing activities | (2,293) | (1,175) | ||
| Net cash used in financing activities | (5,581) | (18,113) | ||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (331) | (118) | ||
| Net decrease in cash, cash equivalents and restricted cash | (3,179) | (3,470) | ||
| Change in cash and cash equivalents reclassified from assets held for sale | — | 1,848 | ||
| Cash, cash equivalents and restricted cash at beginning of year | 14,834 | 17,788 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 11,655 | $ | 16,166 |
8
Walmart Inc.
Supplemental Financial Information
(Unaudited)
Net sales and operating income
| Net Sales | Operating Income | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Three Months Ended | |||||||||
| October 31, | October 31, | |||||||||
| (dollars in millions) | 2022 | 2021 | Percent Change | 2022 | 2021 | Percent Change | ||||
| Walmart U.S. | $ | 104,775 | $ | 96,609 | 8.5% | $ | 5,093 | $ | 4,860 | 4.8% |
| Walmart International | 25,295 | 23,627 | 7.1% | 861 | 871 | -1.1% | ||||
| Sam’s Club | 21,399 | 18,971 | 12.8% | 562 | 475 | 18.3% | ||||
| Corporate and support | — | — | — | (3,821) | (414) | 822.9% | ||||
| Consolidated | $ | 151,469 | $ | 139,207 | 8.8% | $ | 2,695 | $ | 5,792 | -53.5% |
U.S. comparable sales results
| With Fuel | Without Fuel | Fuel Impact | ||||
|---|---|---|---|---|---|---|
| 13 Weeks Ended | 13 Weeks Ended | 13 Weeks Ended | ||||
| 10/28/2022 | 10/29/2021 | 10/28/2022 | 10/29/2021 | 10/28/2022 | 10/29/2021 | |
| Walmart U.S. | 8.5% | 9.6% | 8.2% | 9.2% | 0.3% | 0.4% |
| Sam’s Club | 12.7% | 19.8% | 10.0% | 13.9% | 2.7% | 5.9% |
| Total U.S. | 9.2% | 11.1% | 8.5% | 9.9% | 0.7% | 1.2% |
Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, and it is important to review in conjunction with the company’s financial results reported in accordance with GAAP. Comparable sales excluding fuel is also an important, separate metric that indicates the performance of our existing stores and clubs without considering fuel, which is volatile and unpredictable. Other companies in our industry may calculate comparable sales differently, limiting the comparability of the metric.
9
Walmart Inc.
Reconciliations of and Other Information Regarding Non-GAAP Financial Measures
(Unaudited)
The following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the non-GAAP financial information presented in the press release, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies.
Constant Currency
In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months.
Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart’s underlying performance without the effects of currency exchange rate fluctuations.
The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three and nine months ended October 31, 2022.
| Three Months Ended October 31, 2022 | Nine Months Ended October 31, 2022 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Walmart International | Consolidated | Walmart International | Consolidated | |||||||||||||
| (Dollars in millions) | 2022 | Percent Change1 | 2022 | Percent Change1 | 2022 | Percent Change1 | 2022 | Percent Change1 | ||||||||
| Total revenues: | ||||||||||||||||
| As reported | $ | 25,653 | 6.7 | % | $ | 152,813 | 8.7 | % | $ | 74,638 | -0.6 | % | $ | 447,241 | 6.5 | % |
| Currency exchange rate fluctuations | 1,491 | N/A | 1,491 | N/A | 2,865 | N/A | 2,865 | N/A | ||||||||
| Constant currency total revenues | $ | 27,144 | 12.9 | % | $ | 154,304 | 9.8 | % | $ | 77,503 | 3.2 | % | $ | 450,106 | 7.2 | % |
| Net sales: | ||||||||||||||||
| As reported | $ | 25,295 | 7.1 | % | $ | 151,469 | 8.8 | % | $ | 73,408 | -0.7 | % | $ | 443,138 | 6.5 | % |
| Currency exchange rate fluctuations | 1,473 | N/A | 1,473 | N/A | 2,805 | N/A | 2,805 | N/A | ||||||||
| Constant currency net sales | $ | 26,768 | 13.3 | % | $ | 152,942 | 9.9 | % | $ | 76,213 | 3.0 | % | $ | 445,943 | 7.1 | % |
| Operating income: | ||||||||||||||||
| As reported | $ | 861 | -1.1 | % | $ | 2,695 | -53.5 | % | $ | 2,676 | -8.5 | % | $ | 14,867 | -25.9 | % |
| Currency exchange rate fluctuations | 38 | N/A | 38 | N/A | 121 | N/A | 121 | N/A | ||||||||
| Constant currency operating income | $ | 899 | 3.2 | % | $ | 2,733 | -52.8 | % | $ | 2,797 | -4.4 | % | $ | 14,988 | -25.3 | % |
1 Change versus prior year comparable period.
10
Adjusted operating income
Adjusted operating income is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain charges included in operating income calculated in accordance with GAAP. Management believes that adjusted operating income is a meaningful measure to share with investors because it best allows comparison of the performance with that of the comparable period. In addition, adjusted operating income affords investors a view of what management considers Walmart’s core earnings performance and the ability to make a more informed assessment of such core earnings performance as compared with that of the prior year.
When we refer to adjusted operating income in constant currency, this means adjusted operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart’s underlying performance without the effects of currency exchange rate fluctuations. The table below reflect the calculation of adjusted operating income and adjusted operating income in constant currency for the three and nine months ended October 31, 2022.
| Three Months Ended October 31, | |||
|---|---|---|---|
| Consolidated | |||
| (Dollars in millions) | 2022 | 2021 | |
| Operating income: | |||
| Operating income, as reported | $2,695 | $5,792 | |
| Opioid legal charges1 | 3,325 | — | |
| Adjusted operating income | 6,020 | 5,792 | |
| Percent change2 | 3.9% | NP | |
| Currency exchange rate fluctuations | 38 | — | |
| Adjusted operating income, constant currency | $6,058 | 5,792 | |
| Percent change2 | 4.6% | NP | |
| Nine Months Ended October 31, | |||
| Consolidated | |||
| (Dollars in millions) | 2022 | 2021 | |
| Operating income: | |||
| Operating income, as reported | $14,867 | $20,055 | |
| Opioid legal charges1 | 3,325 | — | |
| Adjusted operating income | 18,192 | 20,055 | |
| Percent change2 | (9.3)% | NP | |
| Currency exchange rate fluctuations | 121 | — | |
| Adjusted operating income, constant currency | $18,313 | $20,055 | |
| Percent change2 | (8.7)% | NP |
1 The opioid legal charges are recorded in Corporate and support.
2 Change versus prior year comparable period.
NP - Not provided
11
Free Cash Flow
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. Net cash provided by operating activities was $15.7 billion for the nine months ended October 31, 2022, which represents a decline of $0.6 billion when compared to the same period in the prior year. The decline is primarily due to the timing of certain payments and a decrease in operating income, partially offset by moderated inventory purchases. Free cash flow for the nine months ended October 31, 2022 was $3.6 billion, which represents a decline of $4.1 billion when compared to the same period in the prior year. The decline in free cash flow is due to the reduction in operating cash flows described above, as well as an increase of $3.5 billion in capital expenditures to support our investment strategy.
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
Additionally, Walmart’s definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company’s free cash flow. As a result, the method used by Walmart’s management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.
| Nine Months Ended | ||||
|---|---|---|---|---|
| October 31, | ||||
| (Dollars in millions) | 2022 | 2021 | ||
| Net cash provided by operating activities | $ | 15,698 | $ | 16,291 |
| Payments for property and equipment (capital expenditures) | (12,061) | (8,588) | ||
| Free cash flow | $ | 3,637 | $ | 7,703 |
| Net cash used in investing activities1 | $ | (12,965) | $ | (1,530) |
| Net cash used in financing activities | (5,581) | (18,113) |
1 “Net cash used in investing activities” includes payments for property and equipment, which is also included in our computation of free cash flow.
12
Adjusted EPS
Adjusted diluted earnings per share attributable to Walmart (Adjusted EPS) is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain amounts included in the diluted earnings per share attributable to Walmart calculated in accordance with GAAP (EPS), the most directly comparable financial measure calculated in accordance with GAAP. Management believes that Adjusted EPS is a meaningful measure to share with investors because it best allows comparison of the performance with that of the comparable period. In addition, Adjusted EPS affords investors a view of what management considers Walmart’s core earnings performance and the ability to make a more informed assessment of such core earnings performance with that of the prior year.
We adjust for the unrealized and realized gains and losses on our equity and other investments each quarter because although the investments are strategic decisions for the company’s retail operations, management’s measurement of each strategy is primarily focused on the operational results rather than the fair value of such investments. Additionally, management does not forecast changes in the fair value of its equity and other investments. Accordingly, management adjusts EPS each quarter for the realized and unrealized gains and losses related to those equity investments.
We have calculated Adjusted EPS for the three and nine months ended October 31, 2022 by adjusting EPS for the following:
unrealized gains and losses on the company’s equity and other investments;
the gain on sale of equity method investment in Brazil;
a discrete tax item; and
opioid legal charges
| Three Months Ended October 31, 2022 | ||||
|---|---|---|---|---|
| Diluted earnings per share: | ||||
| Reported EPS | $(0.66) | |||
| Adjustments: | Pre-Tax Impact | Tax Impact1, 2 | NCI Impact3 | Net Impact |
| Unrealized (gains) and losses on equity and other investments | $1.34 | $(0.24) | $0.01 | $1.11 |
| Opioid legal charges | 1.22 | (0.17) | — | 1.05 |
| Net adjustments4 | $2.16 | |||
| Adjusted EPS4 | $1.50 | |||
| Nine Months Ended October 31, 20225 | ||||
| --- | --- | --- | --- | --- |
| Diluted earnings per share: | ||||
| Reported EPS | $1.97 | |||
| Adjustments: | Pre-Tax Impact | Tax Impact1, 2 | NCI Impact3 | Net Impact |
| Unrealized (gains) and losses on equity and other investments | $2.18 | $(0.40) | $— | $1.78 |
| Gain on sale of equity method investment in Brazil | (0.16) | — | — | (0.16) |
| Discrete tax item | — | (0.06) | — | (0.06) |
| Opioid legal charges | 1.21 | (0.17) | — | 1.04 |
| Net adjustments | $2.60 | |||
| Adjusted EPS | $4.57 |
1 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions.
2 The reported effective tax rate was (23.5%) and 32.4% for the three and nine months ended October 31, 2022, respectively. Adjusted for the above item, the effective tax rate was 25.9% and 25.7% for the three and nine months ended October 31, 2022, respectively.
3 Calculated based on the ownership percentages of our noncontrolling interests.
4 Adjusted EPS for the three months ended October 31, 2022 was calculated using weighted average shares outstanding of 2,720 million, which includes the dilutive impact of share-based payment awards
5 Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding.
13
As previously disclosed in our third quarter ended October 31, 2021 press release, we have calculated Adjusted EPS for the three and nine months ended October 31, 2021 by adjusting EPS for the following: (1) unrealized and realized gains and losses on the company’s equity investments, (2) loss on extinguishment of debt; and (3) the incremental loss on sale of our operations in the U.K and Japan recorded during the first quarter of fiscal 2022.
| Three Months Ended October 31, 2021 | |||
|---|---|---|---|
| Diluted earnings per share: | |||
| Reported EPS | $1.11 | ||
| Adjustments: | Pre-Tax Impact | Tax Impact1, 2 | Net Impact |
| Unrealized and realized (gains) and losses on equity investments | $(0.42) | $0.09 | $(0.33) |
| Loss on extinguishment of debt | 0.86 | (0.19) | 0.67 |
| Net adjustments | $0.34 | ||
| Adjusted EPS | $1.45 | ||
| Nine Months Ended October 31, 20213 | |||
| --- | --- | --- | |
| Diluted earnings per share: | |||
| Reported EPS | $3.59 | ||
| Adjustments: | Pre-Tax Impact | Tax Impact1,2 | Net Impact |
| Unrealized and realized (gains) and losses on equity investments | $0.65 | $(0.13) | $0.52 |
| Loss on extinguishment of debt | 0.86 | (0.19) | $0.67 |
| Incremental loss on sale of our operations in the U.K. and Japan | 0.15 | — | 0.15 |
| Net adjustments | $1.34 | ||
| Adjusted EPS | $4.93 |
1 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions. Minimal realizable tax benefit was provided in connection with the incremental loss on sale.
2 The reported effective tax rate was 24.5% and 25.9% for the three and nine months ended October 31, 2021, respectively. Adjusted for the above items, the effective tax rate was 24.3% and 24.5% for the three and nine months ended October 31, 2021, respectively.
3 Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding.
earningspresentationfy23
Q3 FY2023 Financial presentation to accompany management commentary
This presentation contains statements or may include or may incorporate by reference Walmart management’s guidance regarding adjusted earnings per share, consolidated net sales, consolidated operating income and consolidated adjusted operating income, capital expenditures, share repurchases, Walmart’s effective tax rate for the fiscal year ending January 31, 2023, and comparable sales, among other items. Walmart believes such statements may be deemed to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act") and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other federal securities laws. Assumptions on which such forward- looking statements are based are also forward-looking statements. Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our consolidated, or one of our segment's or business’, economic performance or results of operations for future periods or as of future dates or events or developments that may occur in the future or discuss our plans, objectives or goals. Our actual results may differ materially from those expressed in or implied by any of these forward-looking statements as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including: the impact of the COVID-19 pandemic on our business and the global economy; economic, capital markets and business conditions; trends and events around the world and in the markets in which we operate; currency exchange rate fluctuations, changes in market interest rates and market levels of wages; changes in the size of various markets, including eCommerce markets; unemployment levels; inflation or deflation, generally and in particular product categories; consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels and demand for certain merchandise; the effectiveness of the implementation and operation of our strategies, plans, programs and initiatives; unexpected changes in our objectives and plans; the impact of acquisitions, investments, divestitures, and other strategic decisions; our ability to successfully integrate acquired businesses; changes in the trading prices or fair value of certain equity investments we hold; initiatives of competitors, competitors' entry into and expansion in our markets, and competitive pressures; customer traffic and average transactions in our stores and clubs and on our eCommerce websites; the mix of merchandise we sell, the cost of goods we sell and the shrinkage we experience; our gross profit margins; the financial performance of Walmart and each of its segments, including the amounts of our cash flow during various periods; the amount of our net sales and operating expenses denominated in the U.S. dollar and various foreign currencies; commodity prices and the price of gasoline and diesel fuel; challenges with our supply chain, including disruptions and issues relating to inventory management; disruptions in seasonal buying patterns; the availability of goods from suppliers and the cost of goods acquired from suppliers; our ability to respond to changing trends in consumer shopping habits; consumer acceptance of and response to our stores, clubs, eCommerce platforms, programs, merchandise offerings and delivery methods; cyber security events affecting us and related costs and impact to the business; developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith; casualty and accident- related costs and insurance costs; the turnover in our workforce and labor costs, including healthcare and other benefit costs; our effective tax rate and the factors affecting our effective tax rate, including assessments of certain tax contingencies, valuation allowances, changes in law, administrative audit outcomes, impact of discrete items and the mix of earnings between the U.S. and Walmart's international operations; changes in existing tax, labor and other laws and regulations and changes in tax rates including the enactment of laws and the adoption and interpretation of administrative rules and regulations; the imposition of new taxes on imports, new tariffs and changes in existing tariff rates; the imposition of new trade restrictions and changes in existing trade restrictions; adoption or creation of new, and modification of existing, governmental policies, programs, initiatives and actions in the markets in which Walmart operates and elsewhere and actions with respect to such policies, programs and initiatives; changes in accounting estimates or judgments; the level of public assistance payments; natural disasters, changes in climate, geopolitical events, global health epidemics or pandemics and catastrophic events; and changes in generally accepted accounting principles in the United States. Our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC discuss other risks and factors that could cause actual results to differ materially from those expressed or implied by any forward-looking statement in the presentation. We urge you to consider all of the risks, uncertainties and factors identified above or discussed in such reports carefully in evaluating the forward-looking statements in this presentation. Walmart cannot assure you that the results reflected in or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects for or on our operations or financial performance. The forward-looking statements made today are as of the date of this presentation. Walmart undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances. This presentation includes certain non-GAAP measures as defined under SEC rules, including net sales, revenue, and operating income on a constant currency basis, adjusted operating income, adjusted operating income on a constant currency basis, adjusted EPS, free cash flow and return on investment. Refer to information about the non-GAAP measures contained in this presentation. Additional information as required by Regulation G and Item 10(e) of Regulation S-K regarding non-GAAP measures can be found in our most recent Form 10-K and our Form 8-K furnished as of the date of this presentation with the SEC, which are available at www.stock.walmart.com. 2 Safe harbor and non-GAAP measures
3 Fourth quarter and Fiscal Year 2023 guidance The following guidance reflects the company’s expectations for Q4 and fiscal year 2023 and is provided on a non-GAAP basis as the company cannot predict certain elements which are included in reported GAAP results, such as the changes in fair value of the company’s equity and other investments. Growth rates reflect an adjusted basis for prior year results. Fiscal year 2023 operating income is adjusted for charges related to opioid legal settlements in the third quarter. The company’s guidance assumes a generally stable consumer in the U.S., continued pressure from inflation and mix of products and formats globally. 1 We completed the sale of our operations in the U.K. and Japan in the first quarter of fiscal 2022 Fourth quarter • Consolidated net sales growth of about 3.0%, negatively affected by approximately $1.3 billion from currency fluctuations. • Walmart U.S. comp sales, excluding fuel, of about 3.0%. • Consolidated operating income increase 1.0% to decline 1.0% • Adjusted earnings per share decline of 3.0% to 5.0%. Fiscal Year 2023 The company raises full-year outlook to reflect third quarter performance: • Consolidated net sales growth of about 5.5%. Excluding divestitures1, consolidated net sales growth of about 6.5%. Based on current exchange rates, the company expects a headwind of about $4.1 billion for the year. • Walmart U.S. comp sales growth, excluding fuel, of about 5.5%. • Consolidated adjusted operating income decline of 6.5% to 7.5%, which improved from the company’s prior guidance of a decline of 9.0% to 11.0% and reflects better performance in the third quarter. Excluding divestitures1, consolidated adjusted operating income decline of 5.5% to 6.5%. • Adjusted earnings per share decline of 6.0% to 7.0%. Excluding divestitures1, adjusted earnings per share decline of 5.0% to 6.0%.
4 Total revenue $152.8 +8.7% Total revenue, constant currency1 $154.3 +9.8% Membership and Other Income $1.3 +2.0% Net sales $151.5 +8.8% Net sales, constant currency1 $152.9 +9.9% Gross profit rate 23.7% -89 bps Operating expense as a percentage of net sales 22.8% +144 bps Operating income $2.7 -53.5% Adj. operating income, constant currency1 $6.1 +4.6% Effective tax rate (23.5)% EPS -$0.66 -159.5% Adjusted EPS1 $1.50 +3.4% Walmart Inc. - Q3 FY23 Dollars in billions, except per share. Change is calculated as the change versus the prior year comparable period 1 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. Adj. operating income, constant currency1 $6.1 +4.6%
1 Debt to total capitalization calculated as of October 31, 2022. Debt includes short-term borrowings, long-term debt due within one year, finance lease obligations due within one year, long-term debt and long-term finance lease obligations. Total capitalization includes debt and total Walmart shareholders' equity. 2 Calculated for the trailing 12 months ended October 31, 2022. For ROI, see reconciliations at the end of presentation regarding non-GAAP financial measures. 5 Receivables, net Debt to capitalization1 $8.2 41.5% +11.8% +720 bps Inventories Return on assets2 $64.7 3.7% +12.6% +40 bps Accounts payable Return on investment2 $57.3 12.8% +0.2% -170 bps Walmart Inc. - Q3 FY23 Dollars in billions. Change is calculated as the change versus the prior year comparable period Walmart+ benefits continue to expand driving membership growth Together, Walmart, Sam’s Club and the Walmart Foundation have committed up to $6 million to support recovery and relief efforts
1 See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non-GAAP financial measures. 2 $1.9 billion remaining of $20 billion authorization approved in February 2021. The company repurchased approximately 22 million shares in Q3 fiscal 2023. 6 Operating cash flow Dividends $15.7 $4.6 -$0.6 Capital expenditures Share repurchases2 $12.1 $8.7 +$3.5 Free cash flow1 Returns to shareholders $3.6 $13.3 -$4.1 Walmart Inc. - YTD Q3 FY23 Dollars in billions. Dollar changes may not recalculate due to rounding. Change is calculated as the change versus the prior year comparable period In October, Walmart released our mid-year Culture, Diversity, Equity & Inclusion report Launched two new immersive experiences in the metaverse mega- platform, Roblox, Walmart Land and Walmart's Universe of Play
7 Net Sales $104.8 +8.5% eCommerce net sales growth +16% eCommerce contribution to comp1 80 bps Inventory Total: +12.4% Comparable sales1 8.2% Comparable transactions 2.1% Comparable average ticket 6.0% • Strong grocery share gains, including from high-income households • Robust seasonal event sales with strength in Back-to-School classroom essentials and Halloween candy, costumes and home decor • eCommerce sales reflected 40% growth in advertising as well as strength in pickup & delivery, marketplace, and fulfillment services • Comp sales up 17.4% on two-year stack, a 570 bps acceleration from Q2 • Comp sales reflected strength in food categories, private brand sales, and higher average ticket and store transactions • On a two-year stack, comp transactions increased 7.8% Remodels: >235 stores Pickup: ~4,600 locations Same-day delivery: >3,900 stores • ~70% of increase relates to inflation • Remainder of growth due to improved in-stocks and higher levels of general merchandise • Q3 growth reflects a 10 percentage point sequential improvement versus Q2 levels 1 Comp sales for the 13-week period ended October 28, 2022 compared to the 13-week period ended October 29, 2021, and excludes fuel. Walmart U.S. - Q3 FY23 Dollars in billions. Change is calculated as the change versus the prior year comparable period
8 Gross profit rate -77 bps Operating income $5.1 +4.8% Operating expense rate -60 bps • Increased general merchandise markdowns pressured gross margin • Category mix shifts toward grocery and away from general merchandise negatively affected the rate • Benefited from managing prices to reflect high levels of cost inflation • Expense leverage reflects higher sales and lower COVID costs, partially offset by increased wage costs • COVID costs were lower by ~$0.3 billion Adj. operating income1 $5.1 +4.8% Walmart U.S. - Q3 FY23 Dollars in billions. Change is calculated as the change versus the prior year comparable period 1 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. • Operating expense leverage and solid growth in membership and other income more than offset gross margin pressure
Walmart U.S. - quarterly merchandise highlights 9 Category Comp sales Details Grocery + mid-teens • Sales growth led by strength in food (+mid-teens); reflected continued market share gains (according to Nielsen) • Grocery sales increased mid-20% on a two-year stack • Food units sold increased year-over-year, reversing a slight y/y decline last quarter • Consumables led by strength in pet, personal care and beauty due in part to inflation Health & wellness + high single-digits • Strong pharmacy sales primarily reflected mix, branded drug inflation and higher immunization volumes, partially offset by lower COVID vaccines • Sales were up low-20% on a two-year stack General merchandise - low single-digits • General merchandise sales declined on tough compares; on a two-year stack, sales increased MSD% • Softness in discretionary categories including electronics, home, and apparel • Sales were strong in lawn & garden, automotive and back-to-school classroom essentials
• Expense leverage from strong sales, including timing of sales events • Inventory normalizing across markets • Timing of Flipkart’s The Big Billion Days event helped reduce inventory growth • Increase is partially offset by currency exchange rate fluctuations 10 1 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. Inventory $12.2 +2.5% Gross profit rate -131 bps Operating income $0.9 -1.1% Net sales, constant currency1 $26.8 +13.3% Operating expense rate -136 bps Operating income, constant currency1 $0.9 +3.2% • Primarily due to timing of sales events, including Flipkart’s The Big Billion Days • Mix effect from continued growth in lower margin formats and channels of Sam’s Club and eCommerce in China Net sales $25.3 +7.1% Walmart International - Q3 FY23 Dollars in billions. Dollar changes may not recalculate due to rounding. Change is calculated as the change versus the prior year comparable period • Operating income growth even while lapping a strong quarter last year, led by strength in Walmex and China Adj. operating income1 $0.9 -1.1% • Strong sales growth with double-digit growth in Flipkart and Walmex • Strong growth from Flipkart due in part to timing of The Big Billion Days event, which moved from Q4 last year to Q3 this year • Comp sales outpacing inflation in most markets • eCommerce net sales comprised 23% of total net sales, up 400 bps YoY primarily due to Flipkart Adj. operating income, constant currency1,2 $0.9 +3.2% • Retained market growth of 2.7% • Retained market growth of 0.8%
• Sales in food and consumables outpacing general merchandise • eCommerce net sales +3% ◦ Two-year stack +34% 1 Walmex includes the consolidated results of Mexico and Central America. 11 Walmex1 China Canada Net sales growth +12.9% +6.9% +5.5% Comparable sales +11.7% +5.6% +5.2% Comparable transactions +5.2% +1.0% +5.8% Comparable ticket +6.2% +4.6% -0.5% • Double-digit growth with continued strength in food and consumables and the opening of over 20 new stores • In Mexico, comp sales grew 11.1% driven by Bodega and Sam’s Club • Mexico eCommerce net sales +17% ◦ Two-year stack +44% • Strong growth in Sam’s Club and eCommerce • eCommerce net sales +63% ◦ Two-year stack +159% ◦ eCommerce net sales contributed 41% of China net sales Walmart International - Q3 FY23 Results are presented on a constant currency basis. Net sales and comp sales are presented on a nominal, calendar basis and include eCommerce results. Change is calculated as the change versus the prior year comparable period.
• Primarily driven by higher productivity and cost savings initiatives • Increased leverage from operational efficiencies as well as higher penetration of Sam's Club, which has a lower operating expense rate • Higher sales in lower margin food and consumables categories as well as higher shrink 1 Walmex includes the consolidated results of Mexico and Central America. 12 Walmex1 China Canada Gross profit rate Relatively Flat Decrease Decrease x • Supply chain efficiencies and new revenue streams in Mexico, offset by continuing price investments • Mix effect from continued growth in lower margin formats and channels for Sam’s Club and eCommerce Operating expense rate Relatively Flat Decrease Decrease Operating income $ Increase Increase Decrease Walmart International - Q3 FY23 Results are presented on a constant currency basis. Change is calculated as the change versus the prior year comparable period • Higher sales and cost savings initiatives allowing for continued investment in strategic priorities
13 +10% Comparable sales +4.8% Comparable transactions +4.9% Average comparable ticket ~120 bps eCommerce contribution $18,306 +10% Net sales +8% Membership income -50.9999999999999 bps Gross profit rate -52 bps Operating expense rate $397 7.9% Operating income With Fuel Without Fuel Comparable sales1 +12.7% Net sales $21.4 +12.8% eCommerce net sales growth +20% Comparable sales +12.7% Membership income +8.0% Gross profit rate -46 bps Operating expense rate -68 bps Inventory $7.3 +35.8% Operating income $0.6 +18.3% • Solid membership trends with record total member count • Plus penetration continues to improve, reaching a record quarter-end high • Increased membership fees in late Q3; minimal impact to membership metrics to date • Higher sales positively affected operating expense leverage • LIFO charge of $113 million • Strong contribution from both curbside and ship-to-home • Strong comp sales growth driven by solid increases in transactions and ticket • On a two-year stack, comp sales increased 32.5% • Strength in most categories, led by food • Fuel positively affected comp sales as both prices and gallons sold increased • Tobacco negatively affected comp sales 1 Comp sales for the 13-week period ended October 28, 2022 compared to the 13-week period ended October 29, 2021. • Increase reflects inventory build to support higher sales trends, improving in-stocks and inflation Sam's Club - Q3 FY23 Dollars in billions. Change is calculated as the change versus the prior year comparable period
14 $21,399 +12.8% Net Sales +33% eCommerce net sales growth +12.7% Comparable sales -46.0000000000001 bps Gross profit rate -68 bps Operating expense rate $562 18.3% Operating income Without Fuel Net sales $18.3 +10.2% Operating expense rate -52 bps Gross profit rate -51 bps Operating income $0.4 +7.9% Comparable transactions +4.8% Comparable sales1, 2 +10.0% eCommerce contribution ~120 bps Average comparable ticket +4.9% 1 Comp sales for the 13-week period ended October 28, 2022 compared to the 13-week period ended October 29, 2021, and excludes fuel. 2 Tobacco negatively affected comp sales for the 13-week period ended October 28, 2022 by 30 basis points. On a two-year stack, tobacco negatively affected comp sales by 190 basis points. Sam's Club - Q3 FY23 Dollars in billions. Change is calculated as the change versus the prior year comparable period • On a two-year stack, average comp ticket increased 7.5% • On a two-year stack, comp sales increased 23.9% • On a two-year stack, comp transactions increased 15.9%
15 Category Comp sales Details Fresh / Freezer / Cooler + low double-digit • Cooler, fresh meat & seafood, produce & floral, and deli performed well Grocery and beverage + mid-teens • Dry grocery, drinks, and chips showed strength Consumables + mid single-digit • Tabletop & bags, pet supplies, and health & beauty aids performed well Home and apparel + high single-digit • Strength in apparel, sporting goods, seasonal, and housewares Technology, office and entertainment - mid single-digit • Softness in consumer electronics, partially offset by strength in gift cards Health and wellness + mid single-digit • Pharmacy and optical performed well Sam's Club - quarterly financial highlights
We include Return on Assets ("ROA"), which is calculated in accordance with U.S. generally accepted accounting principles ("GAAP") as well as Return on Investment ("ROI") as measures to assess returns on assets. Management believes ROI is a meaningful measure to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts. We consider ROA to be the financial measure computed in accordance with GAAP that is the most directly comparable financial measure to our calculation of ROI. ROA was 3.7 percent and 3.3 percent for the trailing 12 months ended October 31, 2022 and 2021, respectively. The increase in ROA was primarily due to the increase in net income due primarily to lapping losses associated with our dispositions of Asda and Seiyu. ROI was 12.8 percent and 14.5 percent for the trailing 12 months ended October 31, 2022 and 2021, respectively. The decrease in ROI was primarily due to a decrease in operating income which included opioid legal charges recorded in the third quarter of fiscal 2023. We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing twelve months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period. Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in accordance with GAAP most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; and adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI. 16 Non-GAAP measures - ROI
The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, is as follows: 17 3 Upon adoption of ASU 2016-02, Leases, a factor of eight times rent is no longer included in the calculation of ROI on a prospective basis as operating lease assets are now recorded on the Consolidated Balance Sheet. 1 The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2. 2 The average is based on the addition of 'total assets without leased assets, net' at the end of the current period to 'total assets without leased assets, net' at the end of the prior period and dividing by 2, plus 'leased assets, net' at the end of the current period. 3 The average is based on the addition of 'accumulated depreciation and amortization, without leased assets' at the end of the current period to 'accumulated depreciation and amortization, without leased assets' at the end of the prior period and dividing by 2, plus 'accumulated amortization on leased assets' at the end of the current period. NP = not provided CALCULATION OF RETURN ON ASSETS CALCULATION OF RETURN ON INVESTMENT Trailing Twelve Months Trailing Twelve Months Ended October 31, Ended October 31, (Dollars in millions) 2022 2021 (Dollars in millions) 2022 2021 Numerator Numerator Consolidated net income $ 9,116 $ 8,299 Operating income $ 20,754 $ 25,542 Denominator + Interest income 196 141 Average total assets1 $ 246,254 $ 247,857 + Depreciation and amortization 10,840 10,771 Return on assets (ROA) 3.7 % 3.3 % + Rent 2,296 2,360 ROI operating income $ 34,086 $ 38,814 October 31, Denominator Certain Balance Sheet Data 2022 2021 2020 Average total assets1 $ 246,254 $ 247,857 Total assets $ 247,656 $ 244,851 $ 250,863 '+ Average accumulated depreciation and amortization1 103,898 99,872 Accumulated depreciation and amortization 107,628 100,168 99,576 '- Average accounts payable1 57,210 55,654 Accounts payable 57,263 57,156 54,152 '- Average accrued liabilities1 25,959 24,735 Accrued liabilities 27,443 24,474 24,995 Average invested capital $ 266,983 $ 267,340 Return on investment (ROI) 12.8 % 14.5 % 1 The average is based on the addition of the account balance at the end of the current period to the account balance at the end of the prior period and dividing by 2. Non-GAAP measures - ROI (cont.)
1 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow. 18 We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. Net cash provided by operating activities was $15.7 billion for the nine months ended October 31, 2022, which represents a decline of $0.6 billion when compared to the same period in the prior year. The decline is primarily due to the timing of certain payments and a decrease in operating income, partially offset by moderated inventory purchases. Free cash flow for the nine months ended October 31, 2022 was $3.6 billion, which represents a decline of $4.1 billion when compared to the same period in the prior year. The decline in free cash flow is due to the reduction in operating cash flows described above, as well as an increase of $3.5 billion in capital expenditures to support our investment strategy. Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. Additionally, Walmart’s definition of free cash flow is limited, in that it does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Consolidated Statements of Cash Flows. Although other companies report their free cash flow, numerous methods may exist for calculating a company’s free cash flow. As a result, the method used by Walmart’s management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow. The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities. Nine Months Ended October 31, (Dollars in millions) 2022 2021 Net cash provided by operating activities $ 15,698 $ 16,291 Payments for property and equipment (capital expenditures) (12,061) (8,588) Free cash flow $ 3,637 $ 7,703 Net cash used in investing activities1 $ (12,965) $ (1,530) Net cash used in financing activities (5,581) (18,113) Non-GAAP measures - free cash flow
1 Change versus prior year comparable period. 2 Walmart International eCommerce net sales were $5.9 billion and $14.8 billion for the three and nine months ended July 31, 2022, and were negatively impacted by $1,475 million and $10,392 million of currency exchange rate fluctuations, respectively. 3 Walmart International eCommerce net sales were 36.7% flat on a reported basis and increased 2% in constant currency and increased 16.0% on a reported basis and (65.6)% in constant currency for the three and nine months ended October 31, 2022, respectively. 19 In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period's currency exchange rates and the comparable prior year period's currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non- USD acquisitions until owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. When we refer to constant currency operating results, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart’s underlying performance without the effects of currency exchange rate fluctuations. The table below reflects the calculation of constant currency for total revenues, net sales and operating income for the three and nine months ended October 31, 2022. Three Months Ended October 31, 2022 Nine Months Ended October 31, 2022 2022 Percent Change1 2022 Percent Change1 2022 Percent Change1 2022 Percent Change1 (Dollars in millions) Walmart International Consolidated Walmart International Consolidated Total revenues: As reported $ 25,653 6.7 % $ 152,813 8.7 % $ 74,638 -0.6 % $ 447,241 6.5 % Currency exchange rate fluctuations 1,491 N/A 1,491 N/A 2,865 N/A 2,865 N/A Constant currency total revenues $ 27,144 12.9 % $ 154,304 9.8 % $ 77,503 3.2 % $ 450,106 7.2 % Net sales2: As reported $ 25,295 7.1 % $ 151,469 8.8 % $ 73,408 -0.7 % $ 443,138 6.5 % Currency exchange rate fluctuations 1,473 N/A 1,473 N/A 2,805 N/A 2,805 N/A Constant currency net sales $ 26,768 13.3 % $ 152,942 9.9 % $ 76,213 3.0 % $ 445,943 7.1 % Operating income: As reported $ 861 -1.1 % $ 2,695 -53.5 % $ 2,676 -8.5 % $ 14,867 -25.9 % Currency exchange rate fluctuations 38 N/A 38 N/A 121 N/A 121 N/A Constant currency operating income $ 899 3.2 % $ 2,733 -52.8 % $ 2,797 -4.4 % $ 14,988 -25.3 % Non-GAAP measures - constant currency 1 Change versus prior year comparable period. 2 Walmart International eCommerce net sales were $5.9 billion for the three months ended October 31, 2022, and were negatively impacted by $0.4 billion of currency exchange rate fluctuations. Walmart International eCommerce net sales were $4.3 billion for the three months ended October 31, 2021.
1 The opioid legal charges are recorded in Corporate and support. 2Change versus prior year comparable period. NP - not provided 20 Adjusted operating income is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain charges included in operating income calculated in accordance with GAAP. Management believes that adjusted operating income is a meaningful measure to share with investors because it best allows comparison of the performance with that of the comparable period. In addition, adjusted operating income affords investors a view of what management considers Walmart’s core earnings performance and the ability to make a more informed assessment of such core earnings performance as compared with that of the prior year. When we refer to adjusted operating income in constant currency, this means adjusted operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand Walmart’s underlying performance without the effects of currency exchange rate fluctuations. The table below reflect the calculation of adjusted operating income and adjusted operating income in constant currency for the three and nine months ended October 31, 2022. Three Months Ended October 31, Nine Months Ended October 31, Consolidated Consolidated 2022 2021 2022 2021 Operating income: Operating income, as reported 2,695 5,792 14,867 20,055 Opioid legal charges1 3,325 — 3,325 — Adjusted operating income 6,020 5,792 18,192 20,055 Percent change2 3.9 % NP (9.3) % NP Currency exchange rate fluctuations 38 — 121 — Adjusted operating income, constant currency 6,058 5,792 18,313 20,055 Percent change2 4.6 % NP (8.7) % NP Non-GAAP measures - adjusted operating income
21 Adjusted diluted earnings per share attributable to Walmart (Adjusted EPS) is considered a non-GAAP financial measure under the SEC’s rules because it excludes certain amounts included in the diluted earnings per share attributable to Walmart calculated in accordance with GAAP (EPS), the most directly comparable financial measure calculated in accordance with GAAP. Management believes that Adjusted EPS is a meaningful measure to share with investors because it best allows comparison of the performance with that of the comparable period. In addition, Adjusted EPS affords investors a view of what management considers Walmart’s core earnings performance and the ability to make a more informed assessment of such core earnings performance with that of the prior year. We adjust for the unrealized and realized gains and losses on our equity and other investments each quarter because although the investments are strategic decisions for the company’s retail operations, management’s measurement of each strategy is primarily focused on the operational results rather than the fair value of such investments. Additionally, management does not forecast changes in the fair value of its equity and other investments. Accordingly, management adjusts EPS each quarter for the realized and unrealized gains and losses related to those equity investments. We have calculated Adjusted EPS for the three and nine months ended October 31, 2022 by adjusting EPS for the following: 1. unrealized gains and losses on the company’s equity and other investments; 2. the gain on sale of equity method investment in Brazil; 3. a discrete tax item; and 4. opioid legal charges Non-GAAP measures - adjusted EPS
22 1 Change versus prior year comparable period. 2 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions. 3 The reported effective tax rate was (23.5%) and 32.4% for the three and nine months ended October 31, 2022, respectively. Adjusted for the above item, the effective tax rate was 25.9% and 25.7% for the three and nine months ended October 31, 2022, respectively. 4 Calculated based on the ownership percentages of our noncontrolling interests. 5 Adjusted EPS for the three months ended October 31, 2022 was calculated using weighted average shares outstanding of 2,720 million, which includes the dilutive impact of share-based payment awards 6 Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding. Three Months Ended October 31, 2022 Percent Change1 Nine Months Ended October 31, 20225 Percent Change1 Diluted earnings per share: Reported EPS $ (0.66) -159.5% $ 1.97 -45.1% Adjustments5: Pre-Tax Impact Tax Impact2,3 NCI Impact4 Net Impact Pre-Tax Impact Tax Impact2,3 NCI Impact4 Net Impact Unrealized (gains) and losses on equity and other investments $ 1.34 $ (0.24) $ 0.01 $ 1.11 $ 2.18 $ (0.40) $ — $ 1.78 Gain on sale of equity method investment in Brazil — — — — (0.16) — — (0.16) Discrete tax item — — — — — (0.06) — (0.06) Opioid legal charges 1.22 (0.17) — 1.05 1.21 (0.17) — 1.04 Net adjustments6 $ 2.16 $ 2.60 Adjusted EPS5 $ 1.50 3.4% $ 4.57 -7.3% Non-GAAP measures - adjusted EPS (cont.)
23 As previously disclosed in our third quarter ended October 31, 2021 press release, we have calculated Adjusted EPS for the three and nine months ended October 31, 2021 by adjusting EPS for the following: (1) unrealized and realized gains and losses on the company’s equity investments, (2) loss on extinguishment of debt; and (3) the incremental loss on sale of our operations in the U.K and Japan recorded during the first quarter of fiscal 2022. Three Months Ended October 31, 2021 Nine Months Ended October 31, 20213 Diluted earnings per share: Reported EPS $ 1.11 $ 3.59 Adjustments: Pre-Tax Impact Tax Impact1,2 Net Impact Pre-Tax Impact Tax Impact1,2 Net Impact Unrealized and realized (gains) and losses on equity investments (0.42) 0.09 (0.33) 0.65 (0.13) 0.52 Loss on extinguishment of debt 0.86 (0.19) 0.67 0.86 (0.19) 0.67 Incremental loss on sale of our operations in the U.K. and Japan — — — 0.15 — 0.15 Net adjustments $ 0.34 $ 1.34 Adjusted EPS $ 1.45 $ 4.93 Non-GAAP measures - adjusted EPS (cont.) 1 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions. Minimal realizable tax benefit was provided in connection with the incremental loss on sale. 2The reported effective tax rate was 24.5% and 25.9% for the three and nine months ended October 31, 2021, respectively. Adjusted for the above items, the effective tax rate was 24.3% and 24.5% for the three and nine months ended October 31, 2021, respectively. 3Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding.
• Unit counts & square footage • Comparable store sales, including and excluding fuel • Terminology 24 Additional resources at stock.walmart.com
Document
Exhibit 99.3
Walmart Announces Nationwide Opioid Settlement Framework
BENTONVILLE, Ark., Nov. 15, 2022 — Walmart announced today it has agreed to a $3.1 billion nationwide opioid settlement framework designed to resolve substantially all opioid lawsuits and potential lawsuits by state, local, and tribal governments, if all conditions are satisfied.
Walmart believes the settlement framework is in the best interest of all parties and will provide significant aid to communities across the country in the fight against the opioid crisis, with aid reaching state and local governments faster than any other nationwide opioid settlement to date, subject to satisfying all settlement requirements.
Walmart is proud of our pharmacists and our efforts to help fight the opioid crisis. Walmart strongly disputes the allegations in these matters, and this settlement framework does not include any admission of liability. Walmart will continue to vigorously defend the company against any lawsuit not resolved through this settlement framework.
About Walmart’s Commitment to Opioid Stewardship
Walmart’s mission is to help people “live better,” and this includes both providing our customers with access to their prescription medications and helping to fight the opioid crisis facing our country. Walmart has adopted many approaches to fighting the opioid crisis, such as:
•Educating and empowering pharmacists
•Reducing the amount of opioids dispensed
•Protecting against diversion and theft
•Increasing access to overdose reversal medication
•Educating our patients and our communities about opioid abuse
•Advocating for state and national policies aimed at curbing opioid abuse and misuse
More information about Walmart’s industry-leading Opioid Stewardship program is available at https://corporate.walmart.com/opioids.
About Walmart
Walmart Inc. (NYSE: WMT) helps people around the world save money and live better - anytime and anywhere - in retail stores, online, and through their mobile devices. Each week, approximately 230 million customers and members visit more than 10,500 stores and numerous eCommerce websites under 46 banners in 24 countries. With fiscal year 2022 revenue of $573 billion, Walmart employs approximately 2.3 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting https://corporate.walmart.com, on Facebook at https://facebook.com/walmart and on Twitter at https://twitter.com/walmart.
Media Contact Randy Hargrove (800) 331-0085
Investor Contact Steph Wissink stephanie.wissink@walmart.com
Forward-Looking Statements
This release contains statements that may be deemed to be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Act”), that are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other federal securities laws. Assumptions on which such forward-looking statements are based are also forward-looking statements. Such forward-looking statements can typically be identified by the use therein of words and phrases such as “believe,” “continue,” “designed to,” “to be,” “will continue,” “will provide,” variations of such words or phrases, other phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results. These forward-looking statements are based on our knowledge and assumptions that we believe to be reasonable when such forward-looking statements were or are made. Consequently, this cautionary statement qualifies all forward-looking statements we make, including those made herein and incorporated by reference herein. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.