Walmart Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended January 31, 2021. This is an annual report, not a standalone fourth-quarter filing. Walmart operates Walmart U.S., Walmart International and Sam’s Club.
Financial results
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $559.2 billion | $524.0 billion |
| Net sales | $555.2 billion | $519.9 billion |
| Gross profit rate | 24.3% | 24.1% |
| Operating income | $22.5 billion | $20.6 billion |
| Consolidated net income | $13.7 billion | $15.2 billion |
| Net income attributable to Walmart | $13.5 billion | $14.9 billion |
| Diluted EPS | $4.75 | $5.19 |
| Cash provided by operating activities | $36.1 billion | $25.3 billion |
| Free cash flow | $25.8 billion | $14.6 billion |
- Revenue rose 6.7%, driven primarily by strong U.S. and Sam’s Club comparable sales and growth across most international markets. U.S. comparable sales increased 8.7%; U.S. eCommerce sales were approximately $43.0 billion, versus $24.1 billion.
- Operating income increased 9.6%, while consolidated net income declined 9.8%. Diluted EPS fell from $5.19 to $4.75.
- Operating margin was 4.1%, versus 4.0%; operating expenses were 20.9% of net sales in both years. COVID-related incremental costs were $4.0 billion.
- Segment net sales: Walmart U.S. $370.0 billion, up 8.5%; International $121.4 billion, up 1.0%; Sam’s Club $63.9 billion, up 8.7%. Segment operating income was $19.1 billion, $3.7 billion and $1.9 billion, respectively.
Cash, debt and liquidity
- Cash and cash equivalents were $17.7 billion at year-end, up from $9.5 billion. Working capital was a deficit of $2.6 billion, narrowed from a $16.0 billion deficit.
- Total debt was $44.3 billion, including $3.1 billion due within one year; long-term debt was $41.2 billion. The company also reported $15.0 billion of undrawn U.S. committed credit lines.
- Capital expenditures were $10.3 billion, down from $10.7 billion. Cash dividends paid were $6.1 billion; share repurchases were $2.6 billion, down from $5.7 billion.
- Management said operating cash flow, cash on hand and capital-market access should be sufficient for anticipated operating needs, investment, dividends and repurchases. The fiscal 2022 dividend was raised to $2.20 per share from $2.16.
Material changes, outlook and risks
- COVID-19 increased demand, accelerated eCommerce growth and changed shopping patterns, while adding operating costs and disrupting supply and store operations. Management cautioned that pandemic-period growth may not indicate future results and outlook remains uncertain.
- Other gains and losses included an $8.7 billion gain from fair-value changes in equity investments, substantially offset by an $8.3 billion pretax loss associated with international disposals and held-for-sale operations. The dispositions included Argentina, Asda and Seiyu; Asda and Seiyu sales closed after year-end.
- The effective tax rate rose to 33.3% from 24.4%, primarily reflecting limited tax benefits from international disposal losses. Fiscal-year net income and EPS also reflect these unusual items.
- Fiscal 2022 projected capital expenditures are approximately $14 billion, focused on supply chain, automation, customer-facing initiatives and technology. The filing gives no numerical earnings or sales guidance.
- Key disclosed risks include post-pandemic demand normalization, execution and costs of eCommerce and technology investment, intense retail competition, supply-chain and labor pressures, currency movements, cybersecurity, and changing regulation.
- Walmart faces opioid-related government investigations and litigation, including a DOJ civil complaint seeking penalties and injunctive relief, as well as related securities and derivative suits. The company said it could not reasonably estimate potential losses. Asda equal-value claims also remain subject to uncertainty; Walmart agreed to indemnify certain claims up to a contractually determined amount.
Most important facts for investors to verify
- Whether elevated pandemic-driven sales and eCommerce growth can be sustained as customer behavior normalizes.
- How much of reported earnings and tax-rate movement reflects recurring operations versus investment gains and disposal losses.
- Progress and returns on planned fiscal 2022 capital spending and the cost of eCommerce, automation and supply-chain initiatives.
- Developments and potential financial exposure in opioid litigation and investigations, and the indemnity exposure related to Asda claims.
- Liquidity, debt maturities and cash availability, including cash restricted from transfer and obligations associated with businesses held for sale.