Form 8-K Walmart Inc. For: Nov 14

November 14, 2019 7:01 AM

Walmart U.S. Q3 comp sales¹ grew 3.2% and Walmart U.S. eCommerce sales grew 41%,

Company reports Q3 FY20 GAAP EPS of $1.15 and Adjusted EPS²of $1.16, led by strength at Walmart U.S.,

Walmart raises expectations for fiscal 2020 EPS³



	Total revenue was $128.0 billion, an increase of $3.1 billion, or 2.5%. Excluding currency², total revenue was $129.0 billion, an increase of $4.1 billion, or 3.3%.		"We're pleased with our performance for the quarter. Our associates are responding to change in an inspiring way, and we're proud of them. The Walmart U.S. business saw strong comp sales and expense leverage, and operating income grew for the sixth consecutive quarter. We also celebrated the first anniversary of Flipkart and PhonePe as part of the Walmart family. It was great to see record sales in India during The Big Billion Days event. Looking ahead, we're prepared for a good holiday season. Our integrated offering with stores and eCommerce delivers value and convenience for our customers. Our associates are working hard to ensure we succeed -- one customer, one interaction at a time." Doug McMillon President and CEO, Walmart
	Walmart U.S. comp sales increased on a two-year stacked basis by 6.6%. Market share gains in the business were led by food and consumables, including fresh.
	Walmart U.S. eCommerce sales growth of 41% includes strong growth in online grocery.
	Walmart U.S. operating income increased 6.1%.
	Sam's Club comp sales¹ increased 0.6%, and eCommerce sales grew 32%. Reduced tobacco sales negatively affected comp sales by 350 basis points.
	Net sales at Walmart International were $29.2 billion, an increase of 1.3%. Excluding currency², net sales were $30.2 billion, an increase of 4.8%. The inclusion of Flipkart and strength in Walmex and China were partially offset by softness in the U.K.
	Operating income declined 5.4%, or 4.1% in constant currency² due in part to a non-cash impairment charge for Walmart International. Excluding the impairment charge, operating income would have increased slightly. As expected, the inclusion of Flipkart negatively affected operating income.
	Third-quarter adjusted EPS² excludes a non-cash impairment charge of $0.06, net of tax, and an unrealized gain of $0.05, net of tax, on the company's equity investment in JD.com.
	FY20 adjusted EPS² is now expected to increase slightly compared to FY19 adjusted EPS².
	Announced Delivery Unlimited, a grocery delivery membership option, to 1,400 stores in the U.S.
	Launched InHome Delivery in three U.S. cities covering more than one million customers.

Key results

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



	Q3 FY20	Q3 FY19	Change
	Q3 FY20	Q3 FY19	Change
Revenue	$128.0	$124.9	$3.1	2.5%
Revenue (constant currency)²	$129.0	$124.9	$4.1	3.3%
Operating income⁴	$4.7	$5.0	-$0.3	-5.4%
Operating income (constant currency)^{2, 4}	$4.8	$5.0	-$0.2	-4.1%

¹13-week period ended October 25, 2019 compared to 13-week period ended October 26, 2018, 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 Includes GAAP EPS and Adjusted EPS. For FY20, adjusted EPS guidance excludes an unrealized gain of $0.25, net of tax, related to the company's investment in JD.com and a non-cash impairment charge of $0.06, net of tax and noncontrolling interest, through the nine months ended October 31, 2019.

⁴Q3 FY20 operating income includes the impact from a non-cash impairment charge of $0.3 billion before income taxes.



NYSE: WMT	November 14, 2019	stock.walmart.com

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



Free Cash Flow¹	YTD FY20	$ Change	Returns to Shareholders	Q3 FY20	% Change
Operating cash flow	$14.5	-$2.8	Dividends	$1.5	-1.4%
Capital expenditures	$7.8	$0.8	Share repurchases²	$1.1	-51.6%
Free cash flow¹	$6.8	-$3.5	Total	$2.6	-31.6%

Guidance

The following guidance reflects the company’s expectations for fiscal year 2020. Assumptions in the guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. The company continues to assess the ongoing civil unrest in Chile and has not included any related potential discrete financial effects in its assumptions. Additionally, the guidance assumes no further change in fair value of the Company's equity investment in JD.com.


•	FY20 Adjusted EPS³ is now expected to increase slightly compared to FY19 adjusted EPS¹, including Flipkart, and is expected to increase by a high single-digit percentage range, excluding Flipkart.


•	Expectations for the dilution from Flipkart remain unchanged, excluding a non-cash impairment charge.


•	The effective tax rate is now expected to range between 25% and 25.5%.

Segment results

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



		U.S.	Q3 FY20	Q3 FY19	Change
Net sales			$83.2	$80.6	$2.6	3.2%
Comp sales (ex. fuel)⁴			3.2%	3.4%	NM	N/A
	Transactions⁵		1.3%	1.6%	NM	N/A
	Ticket⁵		1.9%	1.8%	NM	N/A
	eCommerce		~170 bps	~140 bps	NM	N/A
Operating income			$4.2	$3.9	$0.2	6.1%



	Q3 FY20	Q3 FY19	Change
	Q3 FY20	Q3 FY19	Change
Net sales	$29.2	$28.8	$0.4	1.3%
Net sales (constant currency)¹	$30.2	$28.8	$1.4	4.8%
Operating income⁶	$0.6	$1.2	-$0.5	-46.2%
Operating income (constant currency)^{1, 6}	$0.7	$1.2	-$0.5	-40.8%

¹ See additional information at the end of this release regarding non-GAAP financial measures.

²$6.6 billion remaining of $20 billion authorization approved in October 2017. The company repurchased approximately 10 million shares in the third quarter of fiscal 2020.

³ FY20 GAAP EPS to increase significantly compared to FY19. For FY20, adjusted EPS guidance excludes an unrealized gain of $0.25, net of tax, related to the company's investment in JD.com and a non-cash impairment charge of $0.06, net of tax and noncontrolling interest, through the nine months ended October 31, 2019.

⁴ 13-week period ended October 25, 2019 compared to 13-week period ended October 26, 2018, and excludes fuel. See Supplemental Financial Information for additional information.

⁵ Beginning with the first quarter of FY20, we updated our definition of traffic as a component of comparable sales to be all sales transactions in our stores as well as for eCommerce. Traffic will now be called transactions. For comparability, we revised this metric for FY19 and have provided a quarterly summary on our website at http://www.stock.walmart.com.

⁶Operating income includes a non-cash impairment charge of $0.3 billion recorded in the third quarter of fiscal 2020.



NYSE: WMT	November 14, 2019	stock.walmart.com



		Q3 FY20	Q3 FY19	Change
		Q3 FY20	Q3 FY19	Change
Net sales		$14.6	$14.5	$0.1	0.7%
Comp sales (ex. fuel)¹		0.6%	3.2%	-260 bps	N/A
	Transactions	5.7%	6.2%	NM	N/A
	Ticket	-5.1%	-3.0%	NM	N/A
	eCommerce	~170 bps	~130 bps	NM	N/A
Operating income		$0.3	$0.4	-$0.1	-13.7%

Additional highlights for the third quarter


•	Announced John Furner as new President and CEO, Walmart U.S.


•	Walmart U.S. ended the quarter with more than 3,000 grocery pickup locations and more than 1,400 same-day grocery delivery locations.


•	Announced Delivery Unlimited, a grocery delivery membership option, to 1,400 stores in the U.S.


•	Launched Walmart InHome Delivery in three U.S. markets to help customers save time by having their fresh groceries and everyday essentials delivered directly into their homes.


•	Opened first-ever Walmart Health center in Dallas, Ga. offering low, transparent pricing on a range of health services all in one facility.


•	Unveiled the Walmart Toy Lab for the holiday season, which invites kids to test this year's most-wanted toys from their tablet or computer.


•	Relaunched fashion boutique 'Scoop' as exclusive brand on walmart.com.


•	Launched shoppable recipes with BuzzFeed's Tasty app, a first-of-its-kind feature where customers add recipe ingredients directly to online grocery cart for pickup or delivery.


•	Launched the Capital One Walmart Rewards credit card program offering 5% cash back at Walmart.com.


•	Announced an agreement with Green Dot to jointly establish a new fintech accelerator, TailFin Labs, LLC, to develop tech-enabled solutions that seamlessly integrate omnichannel shopping and financial services.


•	Opened first supply chain training academy in the U.S.


•	Launched Fresh Learning Lab at Sam's Club, a hands-on training lab for associates to enhance their skills.


•	Launched Sam's Club Care Accelerator with Humana, a pilot program designed to provide members with quality care on routine preventative and primary care services.


•	Reported record sales at Flipkart's 'The Big Billion Days' sales event.


•	Launched same-day pickup at all Sam's Club locations in Mexico.


•	Launched grocery pickup and delivery in Montreal through a partnership with Foodora and expanded partnership with Instacart to communities across Canada.


•	Opened first distribution center in Walmart International with omnichannel management systems in Chile.


•	Added education benefit programs with seven bachelor's degrees and two career diplomas in health-related fields through Live Better U, Walmart's education benefits program.


•	Announced that all coffee sourced for Walmart U.S. private brands is certified sustainable through third-party groups Fair Trade, Rainforest Alliance Certified or UTZ.

¹ 13-week period ended October 25, 2019 compared to 13-week period ended October 26, 2018, and excludes fuel. See Supplemental Financial Information for additional information.

NM = Not meaningful



NYSE: WMT	November 14, 2019	stock.walmart.com

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, nearly 275 million customers and members visit our more than 11,300 stores under 58 banners in 27 countries and eCommerce websites. With fiscal year 2019 revenue of $514.4 billion, Walmart employs over 2.2 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 http://corporate.walmart.com, on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmart.



Investor Relations contact Dan Binder, CFA (479) 258-7172	Media Relations contact Randy Hargrove (800) 331-0085

Forward-Looking Statements

This release contains statements as to Walmart management's guidance regarding earnings per share, adjusted earnings per share and Walmart's effective tax rate for the fiscal year ending January 31, 2020. Walmart believes such statements are "forward-looking statements" as defined in, and are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Assumptions on which such forward-looking statements are based are also forward-looking statements. Walmart's actual results may differ materially from the guidance provided as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including:


•	economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates;


•	currency exchange rate fluctuations, changes in market interest rates and commodity prices;


•	unemployment levels; competitive pressures; 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;


•	consumer enrollment in health and drug insurance programs and such programs' reimbursement rates;


•	the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies;


•	the impact of acquisitions, investments, divestitures, store or club closures, and other strategic decisions;


•	Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;


•	Walmart's effective tax rate and the factors affecting Walmart's 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, trade agreements, trade restrictions and tariff rates;


•	customer transaction and average ticket in Walmart's stores and clubs and on its eCommerce platforms;


•	the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences;


•	the amount of Walmart's total sales and operating expenses in the various markets in which it operates;


•	transportation, energy and utility costs and the selling prices of gasoline and diesel fuel;


•	supply chain disruptions and disruptions in seasonal buying patterns;


•	consumer acceptance of and response to Walmart's stores, clubs, digital platforms, programs, merchandise offerings and delivery methods;


•	cyber security events affecting Walmart and related costs;


•	developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which Walmart is a party;


•	casualty and accident-related costs and insurance costs;


•	the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs;


•	changes in accounting estimates or judgments;


•	the level of public assistance payments; and


•	natural disasters, changes in climate, geo-political events and catastrophic events.

Such risks, uncertainties and factors also include the risks relating to Walmart’s strategy, operations and performance and the financial, legal, tax, regulatory, compliance, reputational and other risks discussed in Walmart’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC. Walmart urges 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 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 Walmart’s operations or financial performance. The forward-looking statements made in this release 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 14, 2019	stock.walmart.com

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)	2019			2018			Percent Change		2019			2018			Percent Change
Revenues:
Net sales	$	126,981		$	123,897		2.5	%	$	379,318		$	372,586		1.8	%
Membership and other income	1,010			997			1.3	%	2,975			3,026			(1.7	)%
Total revenues	127,991			124,894			2.5	%	382,293			375,612			1.8	%
Costs and expenses:
Cost of sales	95,900			93,116			3.0	%	286,857			280,394			2.3	%
Operating, selling, general and administrative expenses	27,373			26,792			2.2	%	80,190			79,328			1.1	%
Operating income	4,718			4,986			(5.4	)%	15,246			15,890			(4.1	)%
Interest:
Debt	547			501			9.2	%	1,693			1,398			21.1	%
Finance, capital lease and financing obligations	86			92			(6.5	)%	254			279			(9.0	)%
Interest income	(44		)	(59		)	(25.4	)%	(148		)	(153		)	(3.3	)%
Interest, net	589			534			10.3	%	1,799			1,524			18.0	%
Other (gains) and losses	(244		)	1,876			(113.0	)%	(996		)	8,570			NM
Income before income taxes	4,373			2,576			69.8	%	14,443			5,796			149.2	%
Provision for income taxes	1,052			759			38.6	%	3,536			2,430			45.5	%
Consolidated net income	3,321			1,817			82.8	%	10,907			3,366			224.0	%
Consolidated net income attributable to noncontrolling interest	(33		)	(107		)	(69.2	)%	(167		)	(383		)	(56.4	)%
Consolidated net income attributable to Walmart	$	3,288		$	1,710		92.3	%	$	10,740		$	2,983		260.0	%

Net income per common share:
Basic net income per common share attributable to Walmart	$	1.16		$	0.58		98.3	%	$	3.76		$	1.01		271.3	%
Diluted net income per common share attributable to Walmart	$	1.15		$	0.58		98.3	%	$	3.74		$	1.01		269.3	%

Weighted-average common shares outstanding:
Basic	2,843			2,924					2,855			2,940
Diluted	2,861			2,941					2,872			2,956

Dividends declared per common share	$	—		$	—				$	2.12		$	2.08

Walmart Inc.

Condensed Consolidated Balance Sheets

(Unaudited)




	October 31,			January 31,			October 31,
(Amounts in millions)	2019			2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	8,606		$	7,722		$	9,174
Receivables, net	5,612			6,283			5,785
Inventories	51,546			44,269			50,380
Prepaid expenses and other	2,148			3,623			4,107
Total current assets	67,912			61,897			69,446

Property and equipment, net	104,326			104,317			104,358
Operating lease right-of-use assets, net	16,944			—			—
Finance lease right-of-use assets, net	4,155			—			—
Property under capital lease and financing obligations, net	—			7,078			6,991
Goodwill	30,716			31,181			31,044
Other long-term assets	15,777			14,822			14,744
Total assets	$	239,830		$	219,295		$	226,583

LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings	$	4,926		$	5,225		$	7,795
Accounts payable	49,750			47,060			49,729
Dividends payable	1,507			—			1,516
Accrued liabilities	20,973			22,159			22,795
Accrued income taxes	327			428			616
Long-term debt due within one year	4,093			1,876			2,591
Operating lease obligations due within one year	1,740			—			—
Finance lease obligations due within one year	468			—			—
Capital leases and financing obligations due within one year	—			729			709
Total current liabilities	83,784			77,477			85,751

Long-term debt	44,912			43,520			43,275
Long-term operating lease obligations	15,741			—			—
Long-term finance lease obligations	4,068			—			—
Long-term capital lease and financing obligations	—			6,683			6,621
Deferred income taxes and other	13,018			11,981			11,467

Commitments and contingencies

Equity:
Common stock	284			288			291
Capital in excess of par value	3,091			2,965			2,887
Retained earnings	80,656			80,785			80,287
Accumulated other comprehensive loss	(12,382		)	(11,542		)	(11,469		)
Total Walmart shareholders’ equity	71,649			72,496			71,996
Noncontrolling interest	6,658			7,138			7,473
Total equity	78,307			79,634			79,469
Total liabilities and equity	$	239,830		$	219,295		$	226,583

The Company adopted ASU 2016-02, Leases (Topic 842), and related amendments as of February 1, 2019 under the modified retrospective approach and, therefore, has not revised comparative periods.

Walmart Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)




	Nine Months Ended
	October 31,
(Amounts in millions)	2019			2018
Cash flows from operating activities:
Consolidated net income	$	10,907		$	3,366
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	8,159			7,947
Unrealized (gains) and losses	(911		)	3,727
(Gains) and losses for disposal of business operations	(1		)	4,846
Deferred income taxes	574			(346		)
Other operating activities	938			735
Changes in certain assets and liabilities, net of effects of acquisitions:
Receivables, net	661			178
Inventories	(7,558		)	(7,279		)
Accounts payable	2,925			4,137
Accrued liabilities	(1,107		)	103
Accrued income taxes	(48		)	(106		)
Net cash provided by operating activities	14,539			17,308

Cash flows from investing activities:
Payments for property and equipment	(7,765		)	(7,014		)
Proceeds from the disposal of property and equipment	218			308
Proceeds from disposal of certain operations	833			—
Payments for business acquisitions, net of cash acquired	(56		)	(13,269		)
Other investing activities	485			(579		)
Net cash used in investing activities	(6,285		)	(20,554		)

Cash flows from financing activities:
Net change in short-term borrowings	(282		)	2,611
Proceeds from issuance of long-term debt	5,492			15,851
Repayments of long-term debt	(1,907		)	(3,050		)
Dividends paid	(4,545		)	(4,597		)
Purchase of Company stock	(4,829		)	(4,161		)
Dividends paid to noncontrolling interest	(407		)	(252		)
Other financing activities	(735		)	(481		)
Net cash provided by (used in) financing activities	(7,213		)	5,921

Effect of exchange rates on cash, cash equivalents and restricted cash	(166		)	(485		)

Net increase in cash, cash equivalents and restricted cash	875			2,190
Cash, cash equivalents and restricted cash at beginning of year	7,756			7,014
Cash, cash equivalents and restricted cash at end of period	$	8,631		$	9,204

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)	2019		2018		Percent Change		2019			2018			Percent Change
Walmart U.S.	$	83,189	$	80,583	3.2	%	$	4,176		$	3,937		6.1	%
Walmart International	29,167		28,793		1.3	%	634			1,179			-46.2	%
Sam's Club	14,625		14,521		0.7	%	327			379			-13.7	%
Corporate and support	—		—		N/A		(419		)	(509		)	-17.7	%
Consolidated	$	126,981	$	123,897	2.5	%	$	4,718		$	4,986		-5.4	%

U.S. comparable sales results



	With Fuel		Without Fuel		Fuel Impact
	13 Weeks Ended		13 Weeks Ended		13 Weeks Ended
	10/25/2019	10/26/2018	10/25/2019	10/26/2018	10/25/2019	10/26/2018
Walmart U.S.	3.1%	3.5%	3.2%	3.4%	-0.1%	0.1%
Sam's Club	0.8%	5.3%	0.6%	3.2%	0.2%	2.1%
Total U.S.	2.8%	3.8%	2.8%	3.4%	0.0%	0.4%

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.

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 or for countries experiencing hyperinflation. 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, 2019.



	Three Months Ended October 31,								Nine Months Ended October 31,
	Walmart International				Consolidated				Walmart International				Consolidated
(Dollars in millions)	2019		Percent Change¹		2019		Percent Change¹		2019		Percent Change¹		2019		Percent Change¹
Total revenues:
As reported	$	29,488	1.4	%	$	127,991	2.5	%	$	88,006	-1.7	%	$	382,293	1.8	%
Currency exchange rate fluctuations	1,017		N/A		1,017		N/A		4,181		N/A		4,181		N/A
Constant currency total revenues	$	30,505	4.9	%	$	129,008	3.3	%	$	92,187	3.0	%	$	386,474	2.9	%

Net sales:
As reported	$	29,167	1.3	%	$	126,981	2.5	%	$	87,081	-1.6	%	$	379,318	1.8	%
Currency exchange rate fluctuations	1,010		N/A		1,010		N/A		4,148		N/A		4,148		N/A
Constant currency net sales	$	30,177	4.8	%	$	127,991	3.3	%	$	91,229	3.1	%	$	383,466	2.9	%

Operating income:
As reported	$	634	-46.2	%	$	4,718	-5.4	%	$	2,265	-39.0	%	$	15,246	-4.1	%
Currency exchange rate fluctuations	64		N/A		64		N/A		145		N/A		145		N/A
Constant currency operating income	$	698	-40.8	%	$	4,782	-4.1	%	$	2,410	-35.1	%	$	15,391	-3.1	%

¹Change versus prior year comparable period.

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. We had net cash provided by operating activities of $14.5 billion for the nine months ended October 31, 2019, which decreased when compared to $17.3 billion for the nine months ended October 31, 2018 primarily due to the timing of vendor payments and U.S. associate payroll, as well as the inclusion of Flipkart operations. We generated free cash flow of $6.8 billion for the nine months ended October 31, 2019, which decreased when compared to $10.3 billion for the nine months ended October 31, 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.8 billion in increased capital expenditures.

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)	2019			2018
Net cash provided by operating activities	$	14,539		$	17,308
Payments for property and equipment (capital expenditures)	(7,765		)	(7,014		)
Free cash flow	$	6,774		$	10,294

Net cash used in investing activities¹	$	(6,285	)	$	(20,554	)
Net cash provided by (used in) financing activities	(7,213		)	5,921

¹ "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

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 not excluded 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 for 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.

We have calculated Adjusted EPS for the three months ended October 31, 2019 by adjusting EPS for the following: (1) unrealized gains and losses on the company's equity investment in JD.com and (2) a non-cash impairment charge related to the Jabong.com trade name. We adjust for the unrealized gains and losses on the company's equity investment in JD.com because although the Company's investment in JD.com was a strategic decision for the company's retail operations in China, management's measurement of that strategy is primarily focused on the Walmart China financial results rather than the investment value of JD.com. Additionally, management does not forecast changes in fair value of its equity investments. Accordingly, management adjusts EPS for the unrealized JD.com investment gains and losses. We also adjusted EPS for an impairment charge related to the Jabong.com trade name as a result of a strategic decision to focus on the Myntra.com fashion platform.



	Three Months Ended October 31, 2019
Diluted earnings per share:
Reported EPS										$	1.15

Adjustments:	Pre-Tax Impact			Tax Impact¹			NCI Impact²			Net Impact
Unrealized (gains) and losses on JD.com investment	$	(0.06	)	$	0.01		$	—		$	(0.05	)
Non-cash impairment charge on Jabong.com trade name	0.10			(0.03		)	(0.01		)	0.06
Net adjustments										$	0.01

Adjusted EPS										$	1.16

¹ Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions.

² Calculated based on the ownership percentages of the noncontrolling interest at Flipkart.

As previously disclosed in our third quarter ended October 31, 2018 press release, we have calculated Adjusted EPS for the three months ended October 31, 2018 by adjusting EPS for the following: (1) the loss on sale of the majority stake in Walmart Brazil, (2) an adjustment to the provisional amount recorded in the third quarter of fiscal 2019 related to Tax Reform and (3) unrealized gains and losses on our JD.com investment. The provisional measurement period related to Tax Reform ended in the fourth quarter of fiscal 2019. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three months ended October 31, 2018.



	Three Months Ended October 31, 2018
Diluted earnings per share:
Reported EPS						$	0.58

Adjustments:	Pre-Tax Impact		Tax Impact¹			Net Impact
Unrealized (gains) and losses on JD.com investment	$	0.61	$	(0.13	)	$	0.48
Loss on sale of majority stake in Walmart Brazil	0.03		—			0.03
Adjustment to provisional amount for Tax Reform	—		(0.01		)	(0.01		)
Net adjustments						$	0.50

Adjusted EPS						$	1.08

¹ Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions.

Financial presentation to accompany management transcript Q3 FY20

Safe harbor and non-GAAP measures This presentation contains statements as to Walmart management's guidance regarding earnings per share, adjusted earnings per share and Walmart's effective tax rate for the fiscal year ending January 31, 2020. Walmart believes such statements are "forward-looking statements" as defined in, and are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Assumptions on which such forward-looking statements are based are also forward-looking statements. Walmart's actual results may differ materially from the guidance provided as a result of changes in circumstances, assumptions not being realized or other risks, uncertainties and factors including: • economic, geo-political, capital markets and business conditions, trends and events around the world and in the markets in which Walmart operates; • currency exchange rate fluctuations, changes in market interest rates and commodity prices; • unemployment levels; competitive pressures; 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; • consumer enrollment in health and drug insurance programs and such programs' reimbursement rates; • the amount of Walmart's net sales denominated in the U.S. dollar and various foreign currencies; • the impact of acquisitions, investments, divestitures, store or club closures, and other strategic decisions; • Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space; • Walmart's effective tax rate and the factors affecting Walmart's 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, trade agreements, trade restrictions and tariff rates; • customer transaction and average ticket in Walmart's stores and clubs and on its eCommerce platforms; • the mix of merchandise Walmart sells, the cost of goods it sells and the shrinkage it experiences; • the amount of Walmart's total sales and operating expenses in the various markets in which it operates; • transportation, energy and utility costs and the selling prices of gasoline and diesel fuel; • supply chain disruptions and disruptions in seasonal buying patterns; • consumer acceptance of and response to Walmart's stores, clubs, digital platforms, programs, merchandise offerings and delivery methods; • cyber security events affecting Walmart and related costs; • developments in, outcomes of, and costs incurred in legal or regulatory proceedings to which Walmart is a party; • casualty and accident-related costs and insurance costs; • the turnover in Walmart's workforce and labor costs, including healthcare and other benefit costs; • changes in accounting estimates or judgments; • the level of public assistance payments; and • natural disasters, changes in climate, geo-political events and catastrophic events. Such risks, uncertainties and factors also include the risks relating to Walmart’s strategy, operations and performance and the financial, legal, tax, regulatory, compliance, reputational and other risks discussed in Walmart’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the SEC. Walmart urges 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 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 Walmart’s operations or financial performance. The forward-looking statements made in this presentation 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 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

Fiscal Year 2020 Guidance The following guidance reflects the company’s expectations for fiscal year 2020. Assumptions in the guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. The company continues to assess the ongoing civil unrest in Chile and has not included any related potential discrete financial effects in its assumptions. Additionally, the guidance assumes no further change in fair value of the Company's equity investment in JD.com. • FY20 Adjusted EPS1 is now expected to increase slightly compared to FY19 adjusted EPS2, including Flipkart, and is expected to increase by a high single-digit percentage range, excluding Flipkart. • Expectations for the dilution from Flipkart remain unchanged, excluding a non-cash impairment charge. • The effective tax rate is now expected to range between 25% and 25.5%. 1 FY20 GAAP EPS to increase significantly compared to FY19. For FY20, adjusted EPS guidance excludes an unrealized gain of $0.25, net of tax, related to the company's investment in JD.com and a non-cash impairment charge of $0.06, net of tax and noncontrolling interest, through the nine months ended October 31, 2019. 2 See additional information at the end of this presentation regarding non-GAAP financial measures. 3

Walmart Inc. 1 1 1 1 (Amounts in millions, except per share data) Q3 $ Δ % Δ YTD $ Δ % Δ Total revenue $ 127,991 $ 3,097 2.5 % $ 382,293 $ 6,681 1.8 % Total revenue, constant currency2 129,008 4,114 3.3 % 386,474 10,862 2.9 % Net sales 126,981 3,084 2.5 % 379,318 6,732 1.8 % Net sales, constant currency2 127,991 4,094 3.3 % 383,466 10,880 2.9 % Membership & other income 1,010 13 1.3 % 2,975 (51) (1.7)% Operating income3 4,718 (268) (5.4)% 15,246 (644) (4.1)% Operating income, constant currency2, 3 4,782 (204) (4.1)% 15,391 (499) (3.1)% Interest expense, net 589 55 10.3 % 1,799 275 18.0 % Other (gains) and losses (244) (2,120) NM (996) (9,566) NM Consolidated net income attributable to Walmart 3,288 1,578 92.3 % 10,740 7,757 260.0 % EPS 1.15 0.57 98.3 % 3.74 2.73 270.3 % Adjusted EPS2 1.16 0.08 7.4 % 3.55 0.05 1.4 % 1 Change versus prior year comparable period. 2 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. 3 For the third quarter, excluding the impact of a non-cash trade name impairment charge (which contributed a decline of 5.9% and 5.8% on a reported and constant currency basis, respectively), operating income would have increased 0.5% and 1.7% on a reported and constant currency basis, respectively. 4 NM = Not meaningful

Walmart Inc. Q3 bps Δ1 YTD bps Δ1 Gross profit rate 24.5% (36) bps 24.4% (36) bps Operating expenses as a percentage of net sales2 21.6% (6) bps 21.1% (15) bps Effective tax rate3 24.1% (540) bps 24.5% (1,745) bps Debt to total capitalization4 NP NP 44.9% (100) bps Return on assets5 NP NP 6.3% 370 bps Return on investment5 NP NP 13.7% 30 bps 1 Basis points change versus prior year comparable period. 2 Excluding the impact of the non-cash trade name impairment charge (which contributed 24 basis points of deleverage for the third quarter and 8 basis points of deleverage year to date), we would have delivered 30 basis points of leverage for the third quarter and 23 basis points of leverage year to date. 3 The effective tax rate for the year to date period decreased when compared to the prior comparable period primarily due to the loss on sale of a majority stake in Walmart Brazil. 4 Debt to total capitalization calculated as of October 31, 2019. 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. 5 Calculated for the trailing 12 months ended October 31, 2019. For ROI, see press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. NP = not provided 5

Walmart Inc. 1 1 (Amounts in millions) Q3 $ Δ % Δ Receivables, net $ 5,612 (173) (3.0)% Inventories 51,546 1,166 2.3% Accounts payable 49,750 21 0.0% 1 Change versus prior year comparable period. 6

Walmart Inc. 1 (Amounts in millions) YTD $ Δ Operating cash flow $ 14,539 $ (2,769) Capital expenditures 7,765 751 Free cash flow2 $ 6,774 (3,520) 1 1 (Amounts in millions) Q3 % Δ YTD % Δ Dividends $ 1,509 (0.5)% $ 4,545 (1.1)% Share repurchases3 1,122 (51.6)% 4,829 16.1% Total $ 2,631 (31.4)% $ 9,374 7.0% 1 Change versus prior year comparable period. 2 See press release located at www.stock.walmart.com and reconciliations at the end of this presentation regarding non- GAAP financial measures. 3 $6.6 billion remaining of $20 billion authorization approved in October 2017. The company repurchased approximately 10 7 million shares in the third quarter of fiscal 2020.

Walmart U.S. (Amounts in millions) Q3 Δ1 YTD Δ1 Net sales $83,189 3.2% $248,733 3.1% Comparable sales2,3 3.2% NM 3.1% NM • Comp transactions4 1.3% NM NP NP • Comp ticket4 1.9% NM NP NP eCommerce impact3 ~170 bps NM NP NP Gross profit rate Decrease (4) bps Decrease (7) bps Operating expense rate Decrease (21) bps Decrease (19) bps Operating income $4,176 6.1% $12,977 5.1% 1 Change versus prior year comparable period. 2 Comp sales for the 13-week period ended October 25, 2019, excluding fuel. 3 The results of new acquisitions are included in our comp sales metrics in the 13th month after acquisition. 4 Beginning with the first quarter of FY20, we updated our definition of traffic as a component of comparable sales to be all sales transactions in our stores as well as for eCommerce. Traffic will now be called transactions. For comparability, we revised this metric for FY19 and have provided a quarterly summary on our website at http://www.stock.walmart.com. NM - Not meaningful NP - Not provided 8

Walmart U.S. - quarterly financial highlights Sales • Comp sales1 increased 3.2%, with comp ticket higher by 1.9% and comp transactions grew 1.3%. eCommerce sales grew 41% and contributed approximately 170 basis points to segment comp sales growth. Online grocery was a meaningful contributor to eCommerce growth. • On a two-year stacked basis, comp sales were up 6.6%, marking growth by more than six percent for five of the last six quarters. • Strong sales trends continued across most key categories. Gross profit rate • Gross profit rate was better than expected despite a decline of 4 basis points. Continued price investments pressured gross profit but were partially offset by favorable merchandise mix, including strength in private brands, and lower supply chain costs. The eCommerce team delivered gross profit rate improvement year over year. Expenses • Operating expenses leveraged 21 basis points. Both stores and eCommerce teams delivered expense leverage. Physical stores leveraged expenses for the 11th consecutive quarter due to strong productivity improvements, partially offset by growth of eCommerce in the segment. Inventory • Comp store inventory was up 2.7% and total inventory increased 1.7% on net sales growth of 3.2%. This was due in part to strategic investments in certain categories and eCommerce. We feel good about the quality of our inventory position. Format growth • We had a net opening of 1 Supercenter and remodeled nearly 150 stores. • As of Q3, we had nearly 3,100 grocery pickup locations, more than 1,400 stores with same-day grocery delivery and about 1,400 pickup towers. 1 Comp sales for the 13-week period ended October 25, 2019, excluding fuel. 9

Walmart U.S. - quarterly merchandise highlights Category Comp Comments Food and consumables sales results were strong with snacks & beverages, fresh foods, and pets among the strongest categories. 1 Increased penetration of private brands continues to drive strong sales Grocery + mid single-digit along with our expanding omnichannel offering. Price investments in food led to modest deflation in comp ticket this quarter, while consumables' inflation increased modestly versus last year. Pharmacy comp sales increased primarily due to branded drug Health & wellness + mid single-digit inflation and strong growth in 90-day script counts. General Home and hardlines delivered strong results, particularly in private merchandise2 + low single-digit brands. Unseasonable weather contributed to softness in apparel. 1 Includes food and consumables. 2 General merchandise includes entertainment, toys, hardlines, apparel, home and seasonal. 10

Walmart International Constant Constant 1 1 (Amounts in millions) Reported currency Reported currency Q3 Δ2 Q3 Δ2 1 YTD Δ2 YTD Δ2 Net sales $29,167 1.3% $30,177 4.8% $87,081 (1.6)% $91,229 3.1% Gross profit rate Decrease (150) bps NP NP Decrease (159) bps NP NP Operating expense rate Increase 49 bps NP NP Decrease (5) bps NP NP Operating income $634 (46.2)% $698 (40.8)% $2,265 (39.0)% $2,410 (35.1)% 1 See press release located at www.stock.walmart.com and reconciliations at the end of presentation regarding non-GAAP financial measures. 2 Change versus prior year comparable period. NP - Not provided 11

Walmart International - quarterly financial highlights Sales • Positive comp sales in seven of 10 markets, including the major markets of Mexico, Canada and China. • The inclusion of Flipkart for the full third-quarter in the current fiscal year versus a partial third-quarter in the prior fiscal year positively affected sales. • Changes in currency rates negatively affected net sales by $1.0 billion. Gross profit • Gross profit rate declined 150 basis points on a reported basis, primarily due to Flipkart. A change in mix towards lower margin categories and formats in certain markets were also contributing factors. Expenses • Operating expenses deleveraged 49 basis points on a reported basis. ◦ Excluding the impact of a non-cash trade name impairment charge1, operating expenses would have leveraged 51 basis points on a reported basis. Positive comp sales and cost discipline across multiple markets contributed to the performance. Operating income • Operating income declined 46.2% on a reported basis and declined 40.8% in constant currency, primarily due to Flipkart. ◦ Excluding the impact of a non-cash trade name impairment charge1, operating income would have declined 21.4% and 16.2% on a reported and constant currency basis, respectively. • Changes in currency rates negatively affected operating income by $64 million. Inventory • During the quarter, inventory growth outpaced the sales growth on a reported basis. 1 The non-cash trade name impairment charge contributed 100 basis points of deleverage on a reported basis as well as contributed 24.8% and 24.6% on a reported and constant currency basis, respectively, to the decline in operating income. 12

Walmart International - key market quarterly results Comp3 Gross 1,2 Net Operating Country 3 profit sales income3 Sales Transactions Ticket rate3 Walmex4 3.1% 0.1% 3.0% 4.7% Increase Increase China 3.7% 1.1% 2.6% 6.3% Decrease Increase Canada 1.9% (0.5)% 2.4% 0.9% Decrease Decrease United Kingdom5 (0.5)% (0.9)% 0.4% (0.6)% Decrease Decrease 1 Results are presented on a constant currency basis here and for all key market highlights. Net sales and comp sales are presented on a nominal, calendar basis. 2 eCommerce results are included for each of the markets listed in the table. 3 Change versus prior year comparable period. 4 Walmex includes the consolidated results of Mexico and Central America. 5 Comp sales for the United Kingdom are presented excluding fuel. 13

Walmart International - key market highlights Walmex • Net sales increased 4.7% and comp sales increased 3.1%, led by strength in Mexico. ◦ In Mexico, comp sales increased 3.8% or 10.1% on a two-year stacked basis. ◦ Opened 36 new stores across Mexico and Central America. • Comp sales growth continued to outpace ANTAD1 self-service and clubs. ◦ Increased eCommerce sales in Mexico by 65%. • Gross profit rate increased primarily as a result of improved cost of goods savings initiatives and fewer markdowns. • Operating expenses leveraged primarily as a result of lapping certain charges from last year. • Operating income increased primarily as a result of improved gross margin and operating expense leverage. China • Net sales increased 6.3% and comp sales increased 3.7%. ◦ Sam's Club delivered double-digit comp sales growth. ◦ eCommerce sales grew by 99%. • Gross profit rate declined primarily as a result of the mix effects of continued growth at Sam's Club and in eCommerce. • Operating expense leverage is due to higher sales growth, gains on lease terminations, and store costs savings initiatives. • Operating income increased primarily as a result of higher sales growth and operating expense leverage. 1 ANTAD - Asociación Nacional de Tiendas de Autoservicio y Departamentales; The National Association of Supermarkets and Department Stores 14

Walmart International - key market highlights Canada • Net sales increased 0.9% and comp sales increased 1.9%. ◦ Comp sales growth benefited from strength in grocery and fresh, offset by softer sales in general merchandise and apparel. ◦ The company finalized the sale of Walmart Canada Bank on April 1, 2019, which resulted in a headwind to sales for the quarter of 103 basis points. • Gross profit rate declined primarily as a result of the divestiture of Walmart Canada Bank, increased markdowns in general merchandise and apparel and higher transportation costs. • Operating expenses leveraged for the quarter primarily as a result of the divestiture of Walmart Canada Bank, partially offset by legislative changes to minimum wage requirements. • Operating income declined primarily as a result of the decline in gross profit rate. U.K. • Net sales decreased 0.6% and comp sales declined 0.5%. ◦ The uncertainty surrounding Brexit continues to negatively affect customer spending patterns. ◦ Sales for online grocery continued to outpace the market, according to Kantar. • Gross profit rate declined primarily as a result of seasonal markdowns in apparel following a softer summer season versus last year. • Operating expenses deleveraged primarily as a result of the decline in sales. • Operating income declined primarily as a result of the decline in gross profit rate and increased operating expenses. 15

Sam's Club With fuel Without fuel1 With fuel Without fuel1 (Amounts in millions) Q3 Δ2 Q3 Δ2 YTD Δ2 YTD Δ2 Net sales $14,625 0.7% $13,075 0.6% $43,504 1.3% $38,979 0.8% Comparable sales3 0.8% NM 0.6% NM 1.2% NM 0.7% NM • Comp transactions NP NP 5.7% NM NP NP NP NP • Comp ticket NP NP (5.1)% NM NP NP NP NP eCommerce impact NP NP ~170 bps NM NP NP NP NP Gross profit rate Decrease (30) bps Decrease (45) bps Increase 8 bps Increase 9 bps Membership income NP NP NP 3.1% NP NP NP 2.3% Operating expense rate Increase 11 bps Increase 15 bps Decrease (14) bps Decrease (7) bps Operating income $327 (13.7)% $274 (20.6)% $1,258 13.7% $1,141 11.1% 1 Represents financial information of all non-fuel operations. For the three and nine months ended October 31, 2019, fuel sales were $1.6 billion and $4.5 billion and fuel operating income was $53 million and $117 million, respectively. 2 Change versus prior year comparable period. 3 Comp sales for the 13-week ended October 25, 2019. Tobacco sales negatively affected comparable sales by 350 basis points for Q3. NP - Not provided NM - Not meaningful 16

Sam's Club - quarterly financial highlights Sales • Comp sales1 increased 0.6% and comp transactions grew 5.7%. Tobacco negatively affected comp sales by approximately 350 basis points. • eCommerce sales increased approximately 32%. Gross profit • Gross profit rate decreased 30 basis points and 45 basis points, with and without fuel, respectively. Higher margins on fuel positively affected gross profit. Without fuel, gross profit rate declined due to investments in price and higher eCommerce fulfillment costs. These were partially offset by a reduction in sales of tobacco. Operating expenses • Operating expenses as a percentage of net sales increased 11 and 15 basis points, with and without fuel, respectively. Operating expense deleverage is primarily the result of a reduction in sales of tobacco and a higher level of tech investment partially offset by lower labor- related costs. Membership income • Membership income increased 3.1%. Trends in membership continue to improve. Compared to last year, the total number of members, overall renewal rates and renewal rates for Plus members all increased for the quarter. Inventory • Inventory increased 0.5% to support sales growth. 1 Comp sales for the 13-week period ended October 25, 2019, excluding fuel. 17

Sam's Club - quarterly category highlights Category Comp Comments Fresh / Freezer / Cooler + mid single-digit Prepared foods, fresh meat and frozen performed well. Grocery and beverage + mid single-digit Snacks, soda, juice and chips performed well. Consumables + mid single-digit Broad-based strength, including paper goods, laundry & home care and pet supplies. Home and apparel + low single-digit Kitchen electrics and apparel performed well. Technology, office and Soft sales of consumer electronics, entertainment and office supplies were partially offset by entertainment - low single-digit improved mobile sales. Health and wellness + low single-digit Pharmacy and OTC performed well. 18

Non-GAAP measures - ROI 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 6.3 percent and 2.6 percent for the trailing twelve months ended October 31, 2019 and 2018, respectively. The increase in ROA was primarily due to the increase in consolidated net income over the trailing twelve months, primarily resulting from lapping the $4.5 billion net loss in fiscal 2019 related to the sale of the majority stake in Walmart Brazil, the change in fair value of the investment in JD.com, and lapping the restructuring and impairment charges in the fourth quarter of fiscal 2018, partially offset by the dilution to operating income related to Flipkart. ROI was 13.7 percent and 13.4 percent for the trailing twelve months ended October 31, 2019 and 2018, respectively. The increase in ROI was due to the increase in operating income over the trailing twelve months primarily as a result of lapping the restructuring and impairment charges in the fourth quarter of fiscal 2018, offset by the dilution to operating income related to Flipkart. The denominator remained relatively flat as the increase in average total assets due to the Flipkart Acquisition was offset by the decrease in average invested capital resulting from the removal of the eight times rent factor upon adoption of ASU 2016-02, Leases ("ASU 2016-02") since operating lease right of use assets are now included in total assets. We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 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. Upon adoption of ASU 2016-02, rent for the trailing 12 months multiplied by a factor of 8 is no longer included in the calculation of ROI on a prospective basis as operating lease assets are now capitalized. For fiscal 2020, lease related assets and associated accumulated amortization are included in the denominator at their carrying amount as of the current balance sheet date, rather than averaged, because they are no longer directly comparable to the prior year calculation which included rent for the trailing 12 months multiplied by a factor of 8. A two-point average will be used for leased assets beginning in fiscal 2021, after one full year from the date of adoption of the new lease standard. Further, beginning prospectively in fiscal 2020, rent expense in the numerator excludes short-term and variable lease costs as these costs are not included in the operating lease right of use asset balance. 19

Non-GAAP measures - ROI cont. Prior to adoption of ASU 2016-02, we defined ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 months divided by average invested capital during that period. We considered 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, plus a rent factor equal to the rent for the fiscal year or trailing 12 months multiplied by a factor of 8, which estimated the hypothetical capitalization of our operating leases. Because the new lease standard was adopted prospectively as of February 1, 2019, our calculation of ROI for the comparable fiscal 2019 period was not recast. 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 generally accepted accounting principles 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; 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. 20

Non-GAAP measures - ROI cont. The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, is as follows: CALCULATION OF RETURN ON ASSETS CALCULATION OF RETURN ON INVESTMENT Trailing Twelve Months Trailing Twelve Months Ended October Ended October (Dollars in millions) 2019 31,2018 (Dollars in millions) 2019 31,2018 Numerator Numerator Consolidated net income $ 14,720 $ 5,729 Operating income $ 21,313 $ 20,357 Denominator + Interest income 212 190 Average total assets1 $ 233,207 $ 217,999 + Depreciation and amortization 10,889 10,649 Return on assets (ROA) 6.3% 2.6% + Rent 2,733 3,053 Adjusted operating income $ 35,147 $ 34,249 October 31, Denominator Certain Balance Sheet Data 2019 2018 2017 Average total assets1,2 $ 240,261 $ 217,999 + Average accumulated depreciation Total assets $ 239,830 $ 226,583 $ 209,414 and amortization1,2 87,982 84,136 Leased assets, net 21,099 6,991 NP - Average accounts payable1 49,740 48,658 Total assets without leased assets, net 218,731 219,592 NP - Average accrued liabilities1 21,884 22,276 Accumulated depreciation and amortization 91,697 85,827 82,445 + Rent x 8 N/A 24,424 Accumulated amortization on leased assets 4,140 5,701 NP Average invested capital $ 256,619 $ 255,625 Accumulated depreciation and amortization, without leased assets 87,557 80,126 NP Return on investment (ROI) 13.7% 13.4% Accounts payable 49,750 49,729 47,587 Accrued liabilities 20,973 22,795 21,757 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 corresponding prior period and dividing by 2. Average total assets as used in ROA includes the average impact of the adoption of ASU 2016-02. 2 For the twelve months ended October 31, 2019, as a result of adopting ASU 2016-02, average total assets is based on the average of total assets without leased assets, net plus leased assets, net as of October 31, 2019. Average accumulated depreciation and amortization is based on the average of accumulated depreciation and amortization, without leased assets plus accumulated amortization on leased assets as of October 31, 2019. 21 NP = not provided 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

Non-GAAP measures - 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. We had net cash provided by operating activities of $14.5 billion for the nine months ended October 31, 2019, which decreased when compared $17.3 billion for the nine months ended October 31, 2018 primarily due to the timing of vendor payments and U.S. associate payroll, as well as the inclusion of Flipkart operations. We generated free cash flow of $6.8 billion for the nine months ended October 31, 2019, which decreased when compared to $10.3 billion for the twelve months ended October 31, 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.8 billion in increased capital expenditures. 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) 2019 2018 Net cash provided by operating activities $ 14,539 $ 17,308 Payments for property and equipment (capital expenditures) (7,765) (7,014) Free cash flow $ 6,774 $ 10,294 Net cash used in investing activities1 $ (6,285) $ (20,554) Net cash used in financing activities (7,213) 5,921 1 "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow. 22

Non-GAAP measures - 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 or for countries experiencing hyperinflation. 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, 2019. Three Months Ended October 31, Nine Months Ended October 31, Percent Percent Percent Percent 2019 Change1 2019 Change1 2019 Change1 2019 Change1 (Dollars in millions) Walmart International Consolidated Walmart International Consolidated Total revenues: As reported $ 29,488 1.4% $ 127,991 2.5% $ 88,006 -1.7% $ 382,293 1.8% Currency exchange rate fluctuations 1,017 N/A 1,017 N/A 4,181 N/A 4,181 N/A Constant currency total revenues $ 30,505 4.9% $ 129,008 3.3% $ 92,187 3.0% $ 386,474 2.9% Net sales: As reported $ 29,167 1.3% $ 126,981 2.5% $ 87,081 -1.6% $ 379,318 1.8% Currency exchange rate fluctuations 1,010 N/A 1,010 N/A 4,148 N/A 4,148 N/A Constant currency net sales $ 30,177 4.8% $ 127,991 3.3% $ 91,229 3.1% $ 383,466 2.9% Operating income: As reported $ 634 -46.2% $ 4,718 -5.4% $ 2,265 -39.0% $ 15,246 -4.1% Currency exchange rate fluctuations 64 N/A 64 N/A 145 N/A 145 N/A Constant currency operating income $ 698 -40.8% $ 4,782 -4.1% $ 2,410 -35.1% $ 15,391 -3.1% 1 Change versus prior year comparable period. 23

Non-GAAP measures - 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 not excluded 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 for 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. We have calculated Adjusted EPS for the three months ended October 31, 2019 by adjusting EPS for the following: (1) unrealized gains and losses on the company's equity investment in JD.com and (2) a non-cash impairment charge related to the Jabong.com trade name. We adjust for the unrealized gains and losses on the company's equity investment in JD.com because although the Company's investment in JD.com was a strategic decision for the company's retail operations in China, management's measurement of that strategy is primarily focused on the Walmart China financial results rather than the investment value of JD.com. Additionally, management does not forecast changes in fair value of its equity investments. Accordingly, management adjusts EPS for the unrealized JD.com investment gains and losses. We also adjusted EPS for an impairment charge related to the Jabong.com trade name as a result of a strategic decision to focus on the Myntra.com fashion platform. Percent Percent Three Months Ended October 31, 2019 Change1 Nine Months Ended October 31, 20192 Change1 Diluted earnings per share: Reported EPS $ 1.15 98.3% $ 3.74 270.3% Pre-Tax Tax NCI Net Pre-Tax Tax NCI Net Adjustments: Impact Impact3,4 Impact5 Impact Impact Impact3,4 Impact5 Impact Unrealized (gains) and losses on JD.com $ (0.06) $ 0.01 $ — $ (0.05) $ (0.32) $ 0.07 $ — $ (0.25) investment Non-cash impairment charge on Jabong.com trade name 0.10 (0.03) (0.01) 0.06 0.10 (0.03) (0.01) 0.06 Net adjustments $ 0.01 $ (0.19) Adjusted EPS2 $ 1.16 7.4% $ 3.55 1.4% 1 Change versus prior year comparable period. 2 Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding. 3 The reported effective tax rate was 24.1% for the three months ended October 31, 2019. When adjusted for the above items, the effective tax rate was 24.65% for the three months ended October 31, 2019. 4 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdictions. 24 5 Calculated based on the ownership percentages of the noncontrolling interest at Flipkart.

Non-GAAP measures - adjusted EPS As previously disclosed in our third quarter ended October 31, 2018 press release, we have calculated Adjusted EPS for the three months ended October 31, 2018 by adjusting EPS for the following: (1) the loss on sale of the majority stake in Walmart Brazil, (2) an adjustment to the provisional amount recorded in the third quarter of fiscal 2019 related to Tax Reform and (3) unrealized gains and losses on our JD.com investment. The provisional measurement period related to Tax Reform ended in the fourth quarter of fiscal 2019. The most directly comparable financial measure calculated in accordance with GAAP is EPS for the three months ended October 31, 2018. Three Months Ended October 31, Nine Months Ended October 31, 2018 20182 Diluted earnings per share: Reported EPS $ 0.58 $ 1.01 Pre-Tax Tax Net Pre-Tax Tax Net Adjustments: Impact Impact1 Impact Impact Impact1 Impact Unrealized (gains) and losses on JD.com investment $ 0.61 $ (0.13) $ 0.48 $ 1.25 $ (0.28) $ 0.97 Loss on sale of majority stake in Walmart Brazil 0.03 — 0.03 1.64 (0.10) 1.54 Adjustment to provisional amount for Tax Reform — (0.01) (0.01) — (0.02) (0.02) Net adjustments $ 0.50 $ 2.49 Adjusted EPS2 $ 1.08 $ 3.50 1 Calculated based on nature of item, including any realizable deductions, and statutory rate in effect for relevant jurisdiction. 2 Quarterly adjustments or adjusted EPS may not sum to YTD adjustments or YTD adjusted EPS due to rounding. Additionally, individual adjustments may not sum to net adjustments due to rounding. 25

Additional resources at stock.walmart.com • Unit counts & square footage • Comparable store sales, including and excluding fuel • Revised fiscal 2019 quarterly comp transactions • Terminology 26

StreetInsider

Log in to your account:

Form 8-K Walmart Inc. For: Nov 14

Categories

Next Articles