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 $8.8 billion or 5.5% and $25.7 billion or 5.4% for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were primarily due to strong positive comparable sales in our U.S. segments and international markets driven by growth in transactions and unit volumes, with strength in eCommerce as well as strong sales in grocery and health and wellness. Net sales for the three and nine months ended October 31, 2024 were negatively affected by $1.2 billion and $1.1 billion, respectively, due to fluctuations in currency exchange rates. Membership and other income increased $0.2 billion or 16.1% and $0.7 billion or 17.7% for the three and nine months ended October 31, 2024, respectively, primarily due to strong growth in membership income globally.

Gross profit rate increased 21 and 35 basis points for both the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were primarily driven by the Walmart U.S. segment due to managing prices aligned to our competitive price gaps, as well as growth in higher margin businesses globally, partially offset by mix shifts into lower margin merchandise categories and the timing of Flipkart's BBD sales event in the Walmart International segment.

Operating expenses as a percentage of net sales increased 19 and 32 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increase for the three months ended October 31, 2024 was primarily driven by hurricane-related recovery expenses incurred in the Walmart U.S. and Sam's Club segments, higher marketing expenses and higher variable pay as a result of exceeding planned performance. The increase for the nine months ended October 31, 2024 was primarily driven by higher variable pay as a result of exceeding planned performance, higher marketing expenses and business reorganization costs of $0.3 billion incurred during the first quarter of fiscal 2025.

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 decreases of $4.6 billion and $3.3 billion in other losses for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year, were 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 22.7% and 23.8% for the three and nine months ended October 31, 2024, respectively, compared to 29.7% and 26.1% for the same periods in the previous fiscal year. The decrease in effective tax rate is 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 $4.1 billion for both the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. Accordingly, diluted net income per common share attributable to Walmart was $0.57 and $1.75 for the three and nine months ended October 31, 2024, respectively, which represents an increase of $0.51 for both periods when compared to the same periods in the previous fiscal year.

Walmart U.S. Segment

Net sales for the Walmart U.S. segment increased $5.5 billion or 5.0% and $14.7 billion or 4.5% for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were due to comparable sales of 5.1% and 4.7% for the three and nine months ended October 31, 2024, respectively, driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness. The Walmart U.S. segment's eCommerce sales positively contributed approximately 2.8% to comparable sales for both the three and nine months ended October 31, 2024, which was primarily driven by store-fulfilled pickup and delivery.

Gross profit rate increased 42 and 46 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were primarily driven by managing prices aligned to our competitive price gaps and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 33 and 41 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increase for the three months ended October 31, 2024 was primarily due to hurricane-related recovery expenses and increased marketing and depreciation expenses. The increase for the nine months ended October 31, 2024 was primarily related to increased marketing and depreciation expenses, as well as higher variable pay as a result of exceeding planned performance.

As a result of the factors discussed above, operating income increased $0.5 billion and $1.3 billion for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

Net sales for the Walmart International segment increased $2.3 billion or 8.0% and $7.5 billion or 9.1% for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were primarily due to positive comparable sales in the majority of our international markets led by strength in eCommerce and the shift in timing of Flipkart's BBD sales event. Net sales for the three and nine months ended October 31, 2024 were negatively affected by $1.2 billion and $1.1 billion, respectively, due to fluctuations in currency exchange rates.

Gross profit rate decreased 85 and 4 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The decreases for the three and nine months ended October 31, 2024 were primarily driven by the shift in timing of Flipkart's BBD sales event and ongoing channel mix shifts, partially offset by growth in the majority of our other international markets and ongoing business mix changes. Additionally, for the nine months ended October 31, 2024, the decrease in gross profit rate was also partially offset by improved eCommerce margins across certain markets.

Operating expenses as a percentage of net sales decreased 86 and 42 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The decreases for the three and nine months ended October 31, 2024 were primarily due to strong sales, including the shift in timing of Flipkart's BBD sales event, and format mix shifts primarily in China, partially offset by investments in associate wages in the Mexico and Central America and Canada markets.

As a result of the factors discussed above, operating income increased $0.1 billion and $0.6 billion for the three and nine months ended October 31, 2024, respectively, when compared to the same periods 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 3.9% and $2.8 billion or 4.4% for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were primarily due to comparable sales, including fuel, of 3.8% and 4.3% for the three and nine months ended October 31, 2024, respectively, driven by growth in transactions and unit volumes, including strong sales in grocery and health and wellness. Sam's Club eCommerce sales positively contributed approximately 2.7% and 2.1% to comparable sales for the three and nine months ended October 31, 2024, respectively, which was primarily driven by club-fulfilled curbside pickup and delivery.

Gross profit rate increased 47 and 42 basis points for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increase for the three and nine months ended October 31, 2024 were primarily due to improved margins in fuel and lower markdowns as a result of disciplined inventory management, partially offset by eCommerce fulfillment costs. Additionally, lapping inflation-related LIFO charges in the prior year had a positive impact on gross profit rate for the nine months ended October 31, 2024.

Membership and other income increased 15.1% and 14.3% for the three and nine months ended October 31, 2024, respectively, when compared to the same periods in the previous fiscal year. The increases were 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 63 and 36 basis points for the three and nine months ended October 31, 2024, respectively, 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. Additionally, elevated technology spend in the three months ended October 31, 2024 had a negative impact on operating expenses as a percentage of net sales.

As a result of the factors discussed above, operating income increased slightly for the three months ended October 31, 2024, and increased $0.3 billion for the nine months ended October 31, 2024, when compared to the same periods in the previous fiscal year.