Walmart Inc

Results of Operations

Consolidated Results of Operations

Our total revenues, which are mostly comprised of net sales but also include membership and other income, increased $9.2 billion or 6.0% for the three months ended April 30, 2024 when compared to the same period in the previous fiscal year. The increase was primarily due to strong positive comparable sales in our U.S. segments and international markets driven by growth in transactions, including strong sales in grocery as well as strength in eCommerce. Net sales were also positively affected by an extra day in February 2024 due to a leap year which increased net sales by approximately 1%, as well as $0.4 billion of fluctuations in currency exchange rates for the three months ended April 30, 2024. Membership and other income increased $0.3 billion or 21.0% for the three months ended April 30, 2024, primarily due to strong growth in membership income globally.

Gross profit rate increased 42 basis points for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was primarily driven by the Walmart U.S. segment, due to managing prices aligned to our competitive price gaps, lower markdowns as a result of disciplined inventory management and favorable business mix, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 40 basis points for the three months ended April 30, 2024 when compared to the same period in the previous fiscal year. The increase was primarily driven by higher compensation related expenses in our U.S. segments, including higher variable pay as a result of exceeding our planned performance as well as previously announced wage investments, and business reorganization costs, partially offset by expense leverage from strong sales growth in our International segment.

Other gains and losses consist of certain non-operating items, such as the change in the fair value of our investments and gains or losses on business dispositions, which by their nature can fluctuate from period to period. The net increase of $3.8 billion in other gains for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year, was primarily due to changes in the fair value of our equity and other investments driven by changes in their underlying stock prices.

Our effective income tax rate was 24.6% for the three months ended April 30, 2024, compared to 29.5% for the same period in the previous fiscal year. The decrease in effective tax rate was primarily due to the tax impact on changes in fair value of our investments. Our effective income tax rate may fluctuate from quarter to quarter as a result of factors including changes in our assessment of certain tax contingencies, valuation allowances, changes in tax law, outcomes of administrative audits, the impact of discrete items and the mix and size of earnings among our U.S. operations and international operations, which are subject to statutory rates that may be different than the U.S. statutory rate.

As a result of the factors discussed above, consolidated net income increased $3.4 billion for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. Accordingly, diluted net income per common share attributable to Walmart was $0.63 for the three months ended April 30, 2024, which represents an increase of $0.42 when compared to the same period in the previous fiscal year.

Walmart U.S. Segment

Net sales for the Walmart U.S. segment increased $4.8 billion or 4.6% for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was due to comparable sales of 4.9% for the three months ended April 30, 2024, driven by growth in transactions, with strong sales in grocery and health and wellness. The Walmart U.S. segment's eCommerce sales positively contributed approximately 2.9% to comparable sales for the three months ended April 30, 2024, which was primarily driven by store-fulfilled pickup and delivery.

Gross profit rate increased 46 basis points for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was primarily driven by managing prices aligned to our competitive price gaps and lower markdowns as a result of disciplined inventory management, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 48 basis points for the three months ended April 30, 2024, when compared to the same periods in the previous fiscal year, primarily due to increased compensation related expenses, including higher variable pay as a result of exceeding our planned performance and previously announced wage investments, as well as business reorganization costs.

As a result of the factors discussed above, operating income increased $0.3 billion for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year.

Walmart International Segment

Net sales for the Walmart International segment increased $3.2 billion or 12.1% for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was primarily due to positive comparable sales in each of our international markets driven by strong sales in food and consumables as well as strength in eCommerce. Net sales benefited from the timing of certain seasonal events, along with positive fluctuations in currency exchange rates of $0.4 billion for the three months ended April 30, 2024.

Gross profit rate increased 32 basis points for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was primarily driven by improved eCommerce profitability and favorable business mix, partially offset by ongoing format and channel mix shifts in certain markets, and price investments.

Operating expenses as a percentage of net sales decreased 47 basis points for the three months ended April 30, 2024 when compared to the same period in the previous fiscal year, primarily due to strong sales across markets, disciplined expense management and ongoing format mix changes in certain markets.

As a result of the factors discussed above, operating income increased $0.4 billion for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year.

Sam's Club Segment

(1) We believe the "Excluding Fuel" information is useful to investors because it permits investors to understand the effect of the Sam's Club segment's fuel sales on its results of operations, which are impacted by the volatility of fuel prices. Volatility in fuel prices may continue to impact the operating results of the Sam's Club segment in the future.

Net sales for the Sam's Club segment increased $0.9 billion or 4.6% for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was primarily due to comparable sales, including fuel, of 4.6% for the three months ended April 30, 2024, which benefited from growth in transactions, including strong sales in grocery and consumables and health and wellness. Sam's Club eCommerce sales positively contributed approximately 1.7% to comparable sales for the three months ended April 30, 2024, which was primarily driven by curbside pickup and club-fulfilled delivery.

Gross profit rate increased 58 basis points for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase in gross profit rate for the three months ended April 30, 2024 was primarily due to lapping inflation related LIFO charges in the prior year, and lower markdowns as a result of disciplined inventory management.

Membership and other income increased 14.3% for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year. The increase was due to growth in the membership base and Plus penetration. Membership income also benefited from lapping a prior year promotional offering related to previous membership fee increases.

Operating expenses as a percentage of net sales increased 17 basis points for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year, primarily due to increased compensation related expenses, including higher variable pay as a result of exceeding our planned performance, and elevated technology spend.

As a result of the factors discussed above, operating income increased $0.2 billion for the three months ended April 30, 2024, when compared to the same period in the previous fiscal year.