Walmart Inc. 10-Q Summary: Q1 Fiscal 2027 (Ended April 30, 2026)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended April 30, 2026, representing the first quarter of Walmart's fiscal year 2027. The Company operates three reportable segments: Walmart U.S., Walmart International, and Sam's Club U.S. The filing reflects a strategic focus on omnichannel growth, margin improvement through productivity, and disciplined capital allocation.
Key Financial Metrics
| Metric (in millions, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $177,751 | $165,609 |
| Net Sales | $175,684 | $163,981 |
| Operating Income | $7,493 | $7,135 |
| Net Income (Attributable to Walmart) | $5,330 | $4,487 |
| Diluted EPS | $0.67 | $0.56 |
| Operating Cash Flow | $4,738 | $5,411 |
| Free Cash Flow | $(1,946) | $425 |
| Capital Expenditures | $6,684 | $4,986 |
| Total Debt (Long-term + Current) | $40,783 | $38,166 |
| Cash and Equivalents | $10,729 | $9,311 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 7.3% year-over-year, driven by a 7.1% increase in net sales. Walmart U.S. comparable sales rose 4.3%, while Walmart International sales surged 18.0% (including a $2.3 billion positive currency impact).
- Profitability: Operating income grew 5.0% to $7.49 billion. However, operating margin decreased 8 basis points to 4.3% of net sales due to higher depreciation, business reorganization charges ($0.2 billion), and increased healthcare costs.
- Cash Flow Dynamics: Operating cash flow declined $0.7 billion primarily due to timing of inventory receipts. Free cash flow turned negative ($1.9 billion) compared to positive $425 million in the prior year, driven by a $1.7 billion increase in capital expenditures to support omnichannel infrastructure.
- Debt Activity: The Company issued $4.2 billion in new long-term debt in April 2026 and repaid $1.5 billion in maturing debt. Short-term borrowings increased significantly to $10.7 billion.
Guidance, Outlook, and Risks
Management Commentary: Management highlighted strong performance in grocery and general merchandise, with eCommerce contributing significantly to comparable sales growth (5.2% in Walmart U.S.). The Company reaffirmed its commitment to "everyday low prices" and investing in automation and supply chain technology.
Capital Allocation: A new $30 billion share repurchase program was approved in February 2026, with $28.2 billion remaining authorized as of April 30, 2026. The annual dividend was increased to $0.99 per share for fiscal 2027.
Risks and Contingencies:
- Legal Proceedings: Significant ongoing litigation includes opioid-related matters (MDL No. 2804), DOJ civil litigation regarding controlled substances, and the Asda Equal Value Claims (indemnification obligation). A $100 million settlement was reached regarding the Spark Driver platform (with $37 million accrued).
- Regulatory: Antitrust investigations in Mexico (COFECE) and India (CCI) regarding Flipkart and Walmex operations remain pending.
- Macroeconomic: Risks include tariff uncertainties, inflationary pressures, currency fluctuations, and supply chain disruptions.
Investor Verification Checklist
- Free Cash Flow Reversal: Verify the sustainability of negative free cash flow given the aggressive $6.7 billion capital expenditure run rate.
- Debt Maturity Profile: Review the impact of the $4.2 billion new debt issuance on future interest expense and leverage ratios.
- Legal Exposure: Assess the potential financial impact of unresolved opioid litigation and the Asda indemnification obligations.
- Margin Pressure: Monitor the trajectory of operating expenses as a percentage of sales, specifically regarding healthcare costs and depreciation from new investments.
- Share Repurchase Execution: Track the utilization of the new $30 billion buyback authorization relative to free cash flow generation.