Walmart Inc. [WMT] Filings

10-Q 1 wmt-20220731.htm 10-Q wmt-20220731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended July 31, 2022.


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to .

Commission File Number 001-06991

WALMART INC.

(Exact name of registrant as specified in its charter)


Delaware		71-0415188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

702 S.W. 8th Street		72716
Bentonville	AR
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (479) 273-4000

Former name, former address and former fiscal year, if changed since last report: N/A

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

New York Stock Exchange

2.550% Notes Due 2026

WMT26

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

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. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 2,714,237,937 shares of common stock outstanding as of August 31, 2022.

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Walmart Inc.

Form 10-Q

For the Quarterly Period Ended July 31, 2022

Table of Contents


			Page
Part I. Financial Information
	Item 1. Financial Statements
		Condensed Consolidated Statements of Income	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Balance Sheets	5
		Condensed Consolidated Statements of Shareholders' Equity	6
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		15
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
	Item 4. Controls and Procedures		25

Part II. Other Information
	Item 1. Legal Proceedings		26
	Item 1A. Risk Factors		29
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
	Item 5. Other Information		29
	Item 6. Exhibits		33

Signatures			34

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PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

Walmart Inc.

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
(Amounts in millions, except per share data)	2022		2021		2022		2021
Revenues:
Net sales	$	151,381	$	139,871	$	291,669	$	277,030
Membership and other income	1,478		1,177		2,759		2,328
Total revenues	152,859		141,048		294,428		279,358
Costs and expenses:
Cost of sales	115,838		105,183		222,685		208,455
Operating, selling, general and administrative expenses	30,167		28,511		59,571		56,640
Operating income	6,854		7,354		12,172		14,263
Interest:
Debt	395		437		767		918
Finance lease	84		78		167		163
Interest income	(31)		(37)		(67)		(67)
Interest, net	448		478		867		1,014

Other (gains) and losses	(238)		953		1,760		3,482
Income before income taxes	6,644		5,923		9,545		9,767
Provision for income taxes	1,497		1,559		2,295		2,592


Consolidated net income	5,147		4,364		7,250		7,175
Consolidated net loss (income) attributable to noncontrolling interest	2		(88)		(47)		(169)
Consolidated net income attributable to Walmart	$	5,149	$	4,276	$	7,203	$	7,006





Net income per common share:
Basic net income per common share attributable to Walmart	$	1.88	$	1.53	$	2.62	$	2.50




Diluted net income per common share attributable to Walmart	1.88		1.52		2.61		2.48

Weighted-average common shares outstanding:
Basic	2,736		2,799		2,745		2,807
Diluted	2,745		2,812		2,755		2,820

Dividends declared per common share	$	—	$	—	$	2.24	$	2.20

See accompanying notes.

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Walmart Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
(Amounts in millions)	2022		2021		2022		2021
Consolidated net income	$	5,147	$	4,364	$	7,250	$	7,175
Consolidated net loss (income) attributable to noncontrolling interest	2		(88)		(47)		(169)

Consolidated net income attributable to Walmart	5,149		4,276		7,203		7,006

Other comprehensive (loss) income, net of income taxes
Currency translation and other	(1,380)		201		(1,148)		3,160
Net investment hedges	—		—		—		(1,202)
Cash flow hedges	(293)		(155)		(251)		(135)
Minimum pension liability	2		2		3		1,971

Other comprehensive (loss) income, net of income taxes	(1,671)		48		(1,396)		3,794
Other comprehensive loss (income) attributable to noncontrolling interest	275		(78)		268		(4)

Other comprehensive (loss) income attributable to Walmart	(1,396)		(30)		(1,128)		3,790

Comprehensive income, net of income taxes	3,476		4,412		5,854		10,969
Comprehensive loss (income) attributable to noncontrolling interest	277		(166)		221		(173)

Comprehensive income attributable to Walmart	$	3,753	$	4,246	$	6,075	$	10,796

See accompanying notes.

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Walmart Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	July 31,		January 31,		July 31,
(Amounts in millions)	2022		2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	13,923	$	14,760	$	22,831
Receivables, net	7,522		8,280		6,103
Inventories	59,921		56,511		47,754
Prepaid expenses and other	2,798		1,519		1,555

Total current assets	84,164		81,070		78,243



Property and equipment, net	96,006		94,515		91,621
Operating lease right-of-use assets	13,872		13,758		13,868
Finance lease right-of-use assets, net	4,514		4,351		4,109

Goodwill	28,664		29,014		29,159
Other long-term assets	19,979		22,152		21,552
Total assets	$	247,199	$	244,860	$	238,552

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Current liabilities:
Short-term borrowings	$	10,634	$	410	$	671
Accounts payable	54,191		55,261		49,601
Dividends payable	3,049		—		3,109
Accrued liabilities	23,843		26,060		23,915
Accrued income taxes	868		851		267
Long-term debt due within one year	5,316		2,803		1,617
Operating lease obligations due within one year	1,464		1,483		1,441
Finance lease obligations due within one year	534		511		501


Total current liabilities	99,899		87,379		81,122

Long-term debt	29,801		34,864		39,581
Long-term operating lease obligations	13,140		13,009		13,116
Long-term finance lease obligations	4,420		4,243		3,952

Deferred income taxes and other	14,092		13,474		13,654

Commitments and contingencies

Redeemable noncontrolling interest	260		—		—

Equity:
Common stock	272		276		278
Capital in excess of par value	4,672		4,839		3,655
Retained earnings	82,519		86,904		84,572
Accumulated other comprehensive loss	(9,894)		(8,766)		(7,976)
Total Walmart shareholders' equity	77,569		83,253		80,529
Nonredeemable noncontrolling interest	8,018		8,638		6,598
Total equity	85,587		91,891		87,127
Total liabilities, redeemable noncontrolling interest, and equity	$	247,199	$	244,860	$	238,552

See accompanying notes.

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Walmart Inc.

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


								Accumulated		Total
				Capital in				Other		Walmart		Nonredeemable
(Amounts in millions)	Common Stock			Excess of		Retained		Comprehensive		Shareholders'		Noncontrolling		Total
	Shares	Amount		Par Value		Earnings		Loss		Equity		Interest		Equity
Balances as of February 1, 2022	2,761	$	276	$	4,839	$	86,904	$	(8,766)	$	83,253	$	8,638	$	91,891
Consolidated net income	—	—		—		2,054		—		2,054		49		2,103
Other comprehensive income, net of income taxes	—	—		—		—		268		268		7		275
Dividends declared ($2.24 per share)	—	—		—		(6,173)		—		(6,173)		—		(6,173)
Purchase of Company stock	(17)	(2)		(125)		(2,249)		—		(2,376)		—		(2,376)

Sale of subsidiary stock	—	—		24		—		—		24		11		35
Other	4	1		(151)		(4)		—		(154)		(1)		(155)
Balances as of April 30, 2022	2,748	$	275	$	4,587	$	80,532	$	(8,498)	$	76,896	$	8,704	$	85,600
Consolidated net income	—	—		—		5,149		—		5,149		(2)		5,147
Other comprehensive (loss), net of income taxes	—	—		—		—		(1,396)		(1,396)		(275)		(1,671)

Purchase of Company stock	(26)	(3)		(182)		(3,201)		—		(3,386)		—		(3,386)
Dividends to noncontrolling interest	—	—		—		—		—		—		(434)		(434)
Sale of subsidiary stock	—	—		8		—		—		8		2		10
Other	—	—		259		39		—		298		23		321
Balances as of July 31, 2022	2,722	272		4,672		82,519		(9,894)		77,569		8,018		85,587

See accompanying notes.


								Accumulated		Total
				Capital in				Other		Walmart		Nonredeemable
(Amounts in millions)	Common Stock			Excess of		Retained		Comprehensive		Shareholders'		Noncontrolling		Total
	Shares	Amount		Par Value		Earnings		Loss		Equity		Interest		Equity
Balances as of February 1, 2021	2,821	$	282	$	3,646	$	88,763	$	(11,766)	$	80,925	$	6,606	$	87,531
Consolidated net income	—	—		—		2,730		—		2,730		81		2,811
Other comprehensive income (loss), net of income taxes	—	—		—		—		3,820		3,820		(74)		3,746
Dividends declared ($2.20 per share)	—	—		—		(6,200)		—		(6,200)		—		(6,200)
Purchase of Company stock	(21)	(2)		(112)		(2,718)		—		(2,832)		—		(2,832)
Dividends to noncontrolling interest	—	—		—		—		—		—		(408)		(408)
Sale of subsidiary stock	—	—		18		—		—		18		57		75
Other	5	—		(128)		2		—		(126)		(5)		(131)
Balances as of April 30, 2021	2,805	$	280	$	3,424	$	82,577	$	(7,946)	$	78,335	$	6,257	$	84,592
Consolidated net income	—	—		—		4,276		—		4,276		88		4,364
Other comprehensive (loss) income, net of income taxes	—	—		—		—		(30)		(30)		78		48

Purchase of Company stock	(17)	(2)		(94)		(2,273)		—		(2,369)		—		(2,369)
Dividends to noncontrolling interest	—	—		—		—		—		—		(10)		(10)
Sale of subsidiary stock	—	—		6		—		—		6		171		177
Other	3	—		319		(8)		—		311		14		325
Balances as of July 31, 2021	2,791	$	278	$	3,655	$	84,572	$	(7,976)	$	80,529	$	6,598	$	87,127

See accompanying notes.

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Walmart Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended July 31,
(Amounts in millions)	2022		2021
Cash flows from operating activities:
Consolidated net income	$	7,250	$	7,175


Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	5,379		5,302
Net unrealized and realized (gains) and losses	1,988		3,019
Losses on disposal of business operations	—		433
Deferred income taxes	111		(385)

Other operating activities	244		606
Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
Receivables, net	874		452
Inventories	(3,730)		(2,725)
Accounts payable	(453)		119
Accrued liabilities	(2,439)		(1,412)
Accrued income taxes	16		(161)
Net cash provided by operating activities	9,240		12,423

Cash flows from investing activities:
Payments for property and equipment	(7,492)		(5,019)
Proceeds from the disposal of property and equipment	72		176
Proceeds from disposal of certain operations, net of divested cash	—		7,935

Payments for business acquisitions, net of cash acquired	(616)		(248)
Other investing activities	(548)		(442)
Net cash (used in) provided by investing activities	(8,584)		2,402

Cash flows from financing activities:
Net change in short-term borrowings	10,230		441

Repayments of long-term debt	(1,439)		(3,010)

Dividends paid	(3,081)		(3,091)
Purchase of Company stock	(5,747)		(5,200)


Sale of subsidiary stock	45		252
Other financing activities	(1,408)		(951)
Net cash used in financing activities	(1,400)		(11,559)

Effect of exchange rates on cash, cash equivalents and restricted cash	(100)		(21)

Net (decrease) increase in cash, cash equivalents and restricted cash	(844)		3,245
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	$	13,990	$	22,881

See accompanying notes.

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Walmart Inc.

Notes to Condensed Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The Condensed Consolidated Financial Statements of Walmart Inc. and its subsidiaries ("Walmart" or the "Company") and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. Certain previously reported amounts have been reclassified to conform to the current year presentation. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and do not contain certain information included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022 ("fiscal 2022"). Therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K.

The Company's Consolidated Financial Statements are based on a fiscal year ending January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag based on a calendar year. There were no significant intervening events during the month of July 2022 related to the consolidated operations using a lag that materially affected the Condensed Consolidated Financial Statements.

The Company's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Historically, the Company's highest sales volume has occurred in the fiscal quarter ending January 31.

Use of Estimates

The Condensed Consolidated Financial Statements have been prepared in conformity with GAAP. Those principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates.

Redeemable Noncontrolling Interest

Noncontrolling interests which are redeemable outside the Company's control at fixed or determinable prices and dates are presented as temporary equity on the Condensed Consolidated Balance Sheets. Redeemable noncontrolling interests are recorded at the greater of the redemption fair value or the carrying value of the noncontrolling interest and adjusted each reporting period for income, loss and any distributions made. As of July 31, 2022, the Company has a redeemable noncontrolling interest related to an acquisition in the Walmart U.S. segment as the minority interest owner holds a put option which may require the Company to purchase their interest beginning in December 2027 and annually thereafter.

Inventories

The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, first-out ("LIFO") method for the Walmart U.S. segment's inventories. The inventory for the Walmart International segment is generally valued in most markets by the retail inventory method of accounting, using the first-in, first-out ("FIFO") method. The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the carrying value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. If necessary, the Company records a LIFO adjustment during interim periods for the projected annual effect of inflation or deflation which is adjusted to actual results based on rates and inventory levels at the end of the year.

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Note 2. Net Income Per Common Share

Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were anti-dilutive and not included in the calculation of diluted net income per common share attributable to Walmart for the three and six months ended July 31, 2022 and 2021.

The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:


	Three Months Ended July 31,				Six Months Ended July 31,
(Amounts in millions, except per share data)	2022		2021		2022		2021
Numerator
Consolidated net income	$	5,147	$	4,364	$	7,250	$	7,175
Consolidated net loss (income) attributable to noncontrolling interest	2		(88)		(47)		(169)
Consolidated net income attributable to Walmart	$	5,149	$	4,276	$	7,203	$	7,006

Denominator
Weighted-average common shares outstanding, basic	2,736		2,799		2,745		2,807
Dilutive impact of share-based awards	9		13		10		13
Weighted-average common shares outstanding, diluted	2,745		2,812		2,755		2,820

Net income per common share attributable to Walmart
Basic	$	1.88	$	1.53	$	2.62	$	2.50
Diluted	1.88		1.52		2.61		2.48

Note 3. Accumulated Other Comprehensive Loss

Amounts reclassified from accumulated other comprehensive loss for derivative instruments are generally recorded in interest, net, in the Company's Condensed Consolidated Statements of Income. Amounts for the minimum pension liability, as well as the cumulative translation and any related net investment hedge impacts resulting from a disposition of a business, are recorded in other gains and losses in the Company's Condensed Consolidated Statements of Income. The following tables provide the changes in the composition of total accumulated other comprehensive loss:


(Amounts in millions and net of immaterial income taxes)	Currency Translation and Other		Net Investment Hedges		Cash Flow Hedges		Minimum Pension Liability		Total
Balances as of February 1, 2022	$	(8,100)	$	94	$	(748)	$	(12)	$	(8,766)

Other comprehensive income before reclassifications, net	225		—		26		—		251

Reclassifications to income, net	—		—		16		1		17
Balances as of April 30, 2022	$	(7,875)	$	94	$	(706)	$	(11)	$	(8,498)
Other comprehensive income (loss) before reclassifications, net	(796)		—		(622)		2		(1,416)
Reclassifications to income, net	(309)		—		329		—		20
Balances as of July 31, 2022	$	(8,980)	$	94	$	(999)	$	(9)	$	(9,894)


(Amounts in millions and net of immaterial income taxes)	Currency Translation and Other		Net Investment Hedges		Cash Flow Hedges		Minimum Pension Liability		Total
Balances as of February 1, 2021	$	(10,772)	$	1,296	$	(304)	$	(1,986)	$	(11,766)
Other comprehensive loss before reclassifications, net	(225)		(7)		(26)		(1)		(259)
Reclassifications related to business dispositions, net(1)	3,258		(1,195)		30		1,966		4,059
Reclassifications to income, net	—		—		16		4		20
Balances as of April 30, 2021	$	(7,739)	$	94	$	(284)	$	(17)	$	(7,946)

Other comprehensive income (loss) before reclassifications, net	123		—		(193)		(3)		(73)
Reclassifications to income, net	—		—		38		5		43
Balances as of July 31, 2021	$	(7,616)	$	94	$	(439)	$	(15)	$	(7,976)

(1) Upon closing of the sale of the Company's operations in the U.K. and Japan during the first quarter of fiscal 2022, these amounts were released from accumulated other comprehensive loss, the majority of which was considered in the impairment evaluation when the individual disposal groups met the held for sale classification in fiscal 2021.

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Note 4. Short-term Borrowings and Long-term Debt

The Company has various committed lines of credit in the U.S. that are used to support its commercial paper program. In April 2022, the Company renewed and extended its existing 364-day revolving credit facility of $10.0 billion as well as its five-year credit facility of $5.0 billion. In total, the Company had committed lines of credit in the U.S. of $15.0 billion at July 31, 2022 and January 31, 2022, all undrawn.

The following table provides the changes in the Company's long-term debt for the six months ended July 31, 2022:


(Amounts in millions)	Long-term debt due within one year		Long-term debt		Total
Balances as of February 1, 2022	$	2,803	$	34,864	$	37,667

Repayments of long-term debt	(1,439)		—		(1,439)
Reclassifications of long-term debt	4,030		(4,030)		—
Other	(78)		(1,033)		(1,111)
Balances as of July 31, 2022	$	5,316	$	29,801	$	35,117

Note 5. Fair Value Measurements

Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

•Level 1: observable inputs such as quoted prices in active markets;

•Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and

•Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The Company measures the fair value of certain equity investments, including certain equity method investments, on a recurring basis in the accompanying Condensed Consolidated Balance Sheets. The fair value of these investments is as follows:


(Amounts in millions)	Fair Value as of July 31, 2022		Fair Value as of January 31, 2022
Equity investments measured using Level 1 inputs	$	4,773	$	6,069
Equity investments measured using Level 2 inputs	5,919		5,819

Total	$	10,692	$	11,888

Derivatives

The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of July 31, 2022 and January 31, 2022, the notional amounts and fair values of these derivatives were as follows:

July 31, 2022

January 31, 2022

(Amounts in millions)

Notional Amount

Fair Value

Notional Amount

Fair Value

Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges