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Walmart U.S. Grew Comp Sales 6.5% in Q2, Including Mid-Teens in Food, and eCommerce Up 12% image

Walmart U.S. Grew Comp Sales 6.5% in Q2, Including Mid-Teens in Food, and eCommerce Up 12%

Bentonville, AK — Walmart delivered strong top-line growth globally, partially driven by inflation. Total revenue was $152.9 billion, up 8.4%, or 9.1% in constant currency2.

Walmart U.S. comp sales1 grew 6.5% and 11.7% on a two- year stack. eCommerce growth was 12% and 18% on a two-year stack. Continued to gain market share in grocery.

Sam’s Club comp sales1 increased 9.5%, and 17.2% on a two-year stack. Membership income increased 8.9% with member count at an all-time high.

Walmart International net sales were $24.4 billion, an increase of $1.3 billion, or 5.7%, negatively affected by

$1.0 billion from currency fluctuations. Double-digit comps in three largest markets of Mexico, Canada, and China.

Global advertising business3 grew nearly 30%, led by Walmart Connect in the U.S. and Flipkart advertising.

Consolidated gross profit rate declined 132 basis points, primarily due to markdowns and mix of sales in the U.S., and an inflation-related LIFO charge at Sam’s Club.

Consolidated operating expenses as a percentage of net sales decreased 45 basis points, primarily due to strong sales growth partially offset by wage investments.

Consolidated operating income was $6.9 billion, a decrease of 6.8%, positively affected by $173 million from an insurance settlement for Walmart Chile.

GAAP and Adjusted EPS2 include a $0.05 impact from the Walmart Chile insurance settlement discussed above, as well as a $0.05 impact from a dividend related to the Company’s equity investment in JD.com.

Comp sales for the 13-week period ended July 29, 2022 compared to the 13-week period ended July 30, 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.

 

Key results

(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)

 

  Q2 FY23 Q2 FY22 Change
Revenue $152.9 $141.0 $11.8 8.4%
Revenue (constant currency)1 $153.9 $141.0 $12.8 9.1%
Operating income $6.9 $7.4 -$0.5 -6.8%
Operating income (constant currency)1 $6.9 $7.4 -$0.4 -6.0%

 

Free Cash Flow1 YTD FY23 $ Change Returns to Shareholders Q2 FY23 % Change

Operating cash flow                          $9.2                -$3.2           Dividends                                                               $1.5                -0.3% Capital expenditures                                                              $7.5                 $2.5         Share repurchases2                                      $3.3               39.6%      Free cash flow1                                                               $1.7                -$5.7           Total                                                               $4.9               24.0%

 

 

Third quarter and Fiscal Year 2023 guidance

The following guidance reflects the company’s expectations for Q3 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, including the changes in fair value of the company’s equity and other investments. Growth rates reflect an adjusted basis for prior year results. The company’s guidance assumes a generally stable consumer in the U.S., continued pressure from inflation and mix of products and formats globally.

Third quarter

  • Consolidated net sales growth of about 5%, negatively affected by approximately $1.3 billion from currency
  • Walmart S. comp sales, excluding fuel, of about 3.0%.
  • Consolidated operating income decline of 0% to 10.0%.
  • Adjusted earnings per share decline of 0% to 11.0%.

Fiscal Year 2023

The company updates its guidance for the fiscal year to reflect second-quarter performance and maintains its outlook for the back-half of the year.

  • Consolidated net sales growth is expected to be about 5%. Excluding divestitures3, consolidated net sales growth is expected to be about 5.5%. Based on current exchange rates, the company expects a headwind of about $2.1 billion in the second half of the year.
  • The company maintains its expectations for Walmart S. comp sales growth, excluding fuel, of about 3% in the second half of the year. For the full year, the company expects Walmart U.S. comp sales growth, excluding fuel, of about 4%.
  • Consolidated adjusted operating income is expected to decline 0% to 11.0%, which improved from the company’s prior guidance of a decline of 11.0% to 13.0% and reflects better performance in the second quarter. Excluding divestitures3, consolidated adjusted operating income is expected to decline 8.0% to 10.0%.
  • Adjusted earnings per share are expected to decline 0% to 11.0%. Excluding divestitures3, adjusted earnings per share is expected to decline 8.0% to 10.0%.
  •  See additional information at the end of this release regarding non-GAAP financial measures.

2 $4.9 billion remaining of $20 billion authorization approved in February 2021. The company repurchased approximately 26 million shares in Q2 fiscal 2023.

3 We completed the sale of our operations in the U.K. and Japan in the first quarter of fiscal 2022.

Segment results

(Amounts in billions, except as noted. Dollar and percentage changes may not recalculate due to rounding.)

 

 U.S. Q2 FY23 Q2 FY22 Change
(ex. fuel)2 6.5% 5.2% NP NP
Transactions 1.0% 6.1% NP NP
Average ticket 5.5% -0.8% NP NP
eCommerce contribution ~100 bps ~20 bps NP NP

 

 

Q2 FY23 Q2 FY22 Change
Net sales $24.4 $23.0 $1.3 5.7%
Net sales (constant currency)1 $25.3 $23.0 $2.3 9.9%
Operating income $1.0 $0.9 $0.2 21.1%
Operating income (constant currency)1 $1.1 $0.9 $0.2 28.3%

 

Q2 FY23 Q2 FY22 Change
(ex. fuel)2 9.5% 7.7% NP NP
Transactions 9.8% 5.1% NP NP
Average ticket -0.2% 2.5% NP NP
eCommerce contribution ~170 bps ~180 bps NP NP

 

 

Walmart Inc.

Condensed Consolidated Statements of Income (Unaudited)

 

Three Months Ended Six Months Ended July 31, July 31,

 

(Amounts in millions, except per share data)

 

2022

 

2021

Percent Change  

2022

 

2021

Percent Change
Revenues:
Net sales $151,381 $139,871 8.2 % $291,669 $277,030 5.3 %
Membership and other income 1,478 1,177 25.6 % 2,759 2,328 18.5 %
Total revenues 152,859 141,048 8.4 % 294,428 279,358 5.4 %
Costs and expenses:
Cost of sales 115,838 105,183 10.1 % 222,685 208,455 6.8 %
Operating, selling, general and administrative expenses 30,167 28,511 5.8 % 59,571 56,640 5.2 %
Operating income 6,854 7,354 (6.8)% 12,172 14,263 (14.7)%
Interest:
Debt 395 437 (9.6)% 767 918 (16.4)%
Finance lease obligations 84 78 7.7 % 167 163 2.5 %
Interest income (31) (37) (16.2)% (67) (67) — %
Interest, net 448 478 (6.3)% 867 1,014 (14.5)%
Other (gains) and losses (238) 953 (125.0)% 1,760 3,482 (49.5)%
Income before income taxes 6,644 5,923 12.2 % 9,545 9,767 (2.3)%
Provision for income taxes 1,497 1,559 (4.0)% 2,295 2,592 (11.5)%
Consolidated net income 5,147 4,364 17.9 % 7,250 7,175 1.0 %
Consolidated net (income) loss attributable to noncontrolling interest 2 (88) (102.3)% (47) (169) (72.2)%
Consolidated net income attributable to Walmart $  5,149 $  4,276 20.4 % $  7,203 $  7,006 2.8 %
Net income per common share:
Basic net income per common share attributable to Walmart $      1.88 $      1.53 22.9 % $      2.62 $      2.50 4.8 %
Diluted net income per common share attributable to Walmart $      1.88 $      1.52 23.7 % $      2.61 $      2.48 5.2 %

 

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

 

 

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

 

Walmart Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

(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

 

Six Months Ended July 31,

 

Walmart Inc.

Supplemental Financial Information (Unaudited)

 

Net Sales
Three Months Ended July 31,

Percent

2022           2021       Change

$ 105,130 $    98,192 7.1%
24,350 23,035 5.7%
21,901 18,644 17.5%
$ 151,381 $ 139,871 8.2%

 

Operating Income
Three Months Ended July 31,

Percent

2022           2021       Change

$      5,683 $      6,089     -6.7%

1,043             861     21.1%

427             660    -35.3%

(299)          (256)   16.8%

$      6,854 $      7,354     -6.8%

 

Net sales and operating income

 

 

 

 

 

(dollars in millions) Walmart U.S. Walmart International Sam’s Club

Corporate and support

Consolidated

 

With Fuel Without Fuel Fuel Impact
13 Weeks Ended

7/29/2022       7/30/2021

13 Weeks Ended

7/29/2022       7/30/2021

13 Weeks Ended

7/29/2022       7/30/2021

7.2%

17.5%

5.6%

13.9%

6.5%

9.5%

5.2%

7.7%

0.7%

8.0%

0.4%

6.2%

8.8% 6.8% 7.0% 5.5% 1.8% 1.3%

 

U.S. comparable sales results

 Walmart U.S. Sam’s Club

Total U.S.

Comparable sales is a metric that indicates the performance of our existing stores and clubs 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.

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.

 

(Dollars in millions) 2022 Change1 2022 Change1 2022 Change1 2022 Change1
Total revenues:
As reported $ 24,884 6.4% $ 152,859 8.4 % $ 48,985 -4.1% $ 294,428 5.4 %
Currency exchange rate fluctuations 996 N/A 996 N/A 1,373 N/A 1,373 N/A
Constant currency total revenues $ 25,880 10.7% $ 153,855 9.1 % $ 50,358 -1.4% $ 295,801 5.9 %

 

t sales:                                                                                                                                                          

As reported                                           $ 24,350            5.7% $ 151,381           8.2 % $ 48,113                                                   -4.4% $ 291,669                                     5.3 %

Currency exchange rate fluctuations                                                      956              N/A             956              N/A          1,332             N/A          1,332         N/A Constant currency net sales                $ 25,306            9.9% $ 152,337           8.9 % $ 49,445                                              -1.8% $ 293,001  5.8 %

 

Operating income:

As reported                                           $     1,043          21.1% $     6,854          -6.8 % $                                                              1,815                 -11.7% $ 12,172         -14.7 %

Currency exchange rate fluctuations 62 N/A 62 N/A 83 N/A 83 N/A
Constant currency operating income $       1,105 28.3% $                    6,916 -6.0 % $                     1,898 -7.6% $ 12,255 -14.1 %

1

Six Months Ended July 31,

(Dollars in millions) 2022 2021
Net cash provided by operating activities $          9,240 $        12,423
Payments for property and equipment (capital expenditures) (7,492) (5,019)
Free cash flow $          1,748 $          7,404
Net cash (used in) provided by investing activities1 $         (8,584) $          2,402
Net cash used in financing activities (1,400) (11,559)

1 “Net cash (used in) provided by investing activities” includes payments for property and equipment, which is also included in our computation of free cash flow.

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