# Walmart Inc. (WMT) — Narrative, FY2027 Q1

Fiscal year ends January 31. "Fiscal 2026" = the year ended January 31, 2026; "fiscal
2027" = the year ending January 31, 2027. The current quarter is the three months ended
April 30, 2026.

Primary sources: Annual Report on Form 10-K for the fiscal year ended January 31, 2026
(accession 0000104169-26-000055, filed March 13, 2026) and Quarterly Report on Form 10-Q
for the quarter ended April 30, 2026 (accession 0000104169-26-000102, filed May 29, 2026),
supplemented by Current Reports on Form 8-K where noted.

---

## Business

*From the FY2026 10-K, accession 0000104169-26-000055.*

Walmart describes itself as a people-led, technology-powered omnichannel retailer whose
purpose is helping people save money and live better. Roughly **280 million customers per
week** visit **more than 10,900 stores across 19 countries** plus the company's eCommerce
sites and mobile apps. Fiscal 2026 total revenues were **$713.2 billion**, of which net
sales were **$706.4 billion**. Principal offices are in Bentonville, Arkansas. The common
stock trades on the Nasdaq Global Select Market under "WMT" — the listing moved from the
NYSE to Nasdaq effective **December 9, 2025**.

The stated pricing model is EDLP (everyday low price — items priced low every day rather
than through frequent promotion), underpinned by EDLC (everyday low cost — expense
discipline so savings can be passed through). Stated strategy: make every day easier for
busy families, operate with discipline, sharpen the culture and become more digital, and
make trust a competitive advantage.

### Three reportable segments

**Walmart U.S.** — 4,611 stores in all 50 states, D.C. and Puerto Rico under the "Walmart"
and "Walmart Neighborhood Market" banners, plus walmart.com and the Walmart app. Fiscal
2026 net sales **$483.0 billion, 68% of consolidated net sales** ($462.4B in fiscal 2025,
$441.8B in fiscal 2024). Substantially all stores offer same-day pickup and delivery.
Walmart+ membership bundles free shipping with no order minimum, unlimited delivery from
store, fuel discounts and Scan & Go. Merchandise runs through three strategic units:
grocery; general merchandise (entertainment, hardlines, fashion, home); and health and
wellness (pharmacy, OTC, optical). Private brands include Great Value, Equate, Mainstays,
bettergoods, Marketside, onn., Ozark Trail, George and others. Adjacent, higher-margin
offerings: advertising for brands and marketplace sellers, supply-chain and fulfillment
services for marketplace sellers, data/analytics for suppliers, fuel, and financial
services (money orders, transfers, check cashing, bill pay, installment lending).

**Walmart International** — 5,743 stores across 18 countries: wholly owned subsidiaries in
Canada, Chile, China and Africa (Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia,
South Africa, Zambia) and majority-owned subsidiaries in India, Mexico and Central America
(Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua). Formats span supercenters,
supermarkets, warehouse clubs and cash-and-carry, plus walmart.com.mx, walmart.ca,
flipkart.com, PhonePe and samsclub.cn. Fiscal 2026 net sales **$130.4 billion, 19% of
consolidated net sales** ($121.9B in fiscal 2025, $114.6B in fiscal 2024). Pickup and
delivery from approximately 3,300 locations. The 2018 acquisitions of majority stakes in
Flipkart and PhonePe (India) anchor the digital footprint.

**Sam's Club U.S.** — 601 membership-only warehouse clubs in 44 states and Puerto Rico,
plus samsclub.com and the app. Fiscal 2026 net sales **$93.0 billion, 13% of consolidated
net sales** ($90.2B in fiscal 2025, $86.2B in fiscal 2024). Membership income is a
significant component of segment operating income. During fiscal 2026 the tiers were Club
at $50/year and Plus at $110/year, with add-on memberships at $45 (raised after quarter
end — see Subsequent events). Plus adds free delivery-from-club, free shipping on $50+
orders, early shopping hours and discounts; members earn Sam's Cash rewards. Scan & Go and
"Just Go" exit remove checkout friction. Member's Mark is the private label.

### Economics and operating footprint

- Pickup or delivery is available at **over 8,400 locations globally**.
- Approximately **2.1 million associates** (≈1.6 million in the U.S., ≈0.5 million
  international) as of January 31, 2026. Roughly 75% of U.S. salaried store, club and
  supply-chain managers began in hourly roles.
- Property (January 31, 2026): 10,955 total retail units, 1,056.8 million total square
  feet. 5,678 units owned vs. 5,277 leased — but the ownership mix is lopsided by segment:
  Walmart U.S. owns 3,728 of 4,611 and Sam's Club owns 464 of 601, while Walmart
  International leases 4,257 of 5,743. 371 distribution facilities (192 U.S., 179
  international); 149 owned, 222 leased.
- Supply chain: 192 U.S. distribution facilities served by a private truck fleet plus
  common carriers. During fiscal 2026 Walmart began combining the Sam's Club U.S. supply
  chain into the broader U.S. network.
- **Seasonality:** the fourth quarter is historically the highest-volume quarter for every
  segment.
- Competition is characterized as highly competitive and rapidly evolving across brick and
  mortar, eCommerce, omnichannel, wholesale clubs, social commerce, digital advertising,
  fulfillment/delivery, health and wellness and financial services — with newer or smaller
  internet-based businesses potentially better able to innovate.
- The business increasingly leans on AI-powered tools across customer experience, associate
  productivity and operations, and the growth story is framed around "mutually reinforcing"
  higher-margin adjacencies: membership, advertising, marketplace and fulfillment services,
  and financial services.

### Leadership

**John Furner** became President and Chief Executive Officer effective **February 2026**;
he had run Walmart U.S. since November 2019. C. Douglas McMillon, the prior President and
CEO, entered a retirement agreement dated November 13, 2025 and remains a director. The
transition came with an unusually broad reshuffle of the operating bench, all effective
February 2026: **David Guggina** to President and CEO, Walmart U.S. (previously Chief
eCommerce Officer, Walmart U.S.); **Christopher Nicholas** to President and CEO, Walmart
International (previously CEO of Sam's Club U.S.); **Latriece Watkins** to President and
CEO, Sam's Club U.S. (previously Chief Merchandising Officer, Walmart U.S.); **Seth
Dallaire** to EVP and Chief Growth Officer; and **Dwayne Milum** to SVP and Controller.
Continuing officers include **John David Rainey**, EVP and Chief Financial Officer since
June 2022 (previously CFO of PayPal); **Suresh Kumar**, Global Chief Technology Officer and
Chief Development Officer since 2019; **Donna Morris**, Chief People Officer; **Daniel J.
Bartlett**, EVP Corporate Affairs; and **Daniel Danker**, EVP AI Acceleration, Product and
Design, hired from Instacart in August 2025.

---

## Risk factors

*Condensed from Item 1A of the FY2026 10-K, accession 0000104169-26-000055.*

### Strategic

- **Omnichannel execution and the cost of the eCommerce/technology build.** The strategy
  depends on eCommerce, technology, AI, talent, supply-chain automation, advertising,
  acquisitions, joint ventures and new/remodeled stores all working together. Failure on
  individual components could hit market position, net sales and financial performance, and
  could force impairment of intangible or long-lived assets. Two-sided pressure is flagged
  explicitly: the cost of these investments hurts near-term results, while a greater
  concentration of eCommerce sales — including rising online grocery and the growing role of
  **AI-enabled and "agentic" platforms in product search, discovery, advertising and
  purchasing** — could reduce store traffic and the cross-shopping it generates.
- **Reading consumer demand.** Mis-predicting demand produces lower sales, spoilage and
  markdowns, or excess/insufficient inventory and service interruptions. Price transparency
  and the speed/cost of shipping keep rising in importance.
- **Reputation.** Shrink and theft, misuse of AI, biased or flawed AI search results, or a
  data breach could erode trust quickly; corporate positions on social and environmental
  topics are tracked and can draw boycotts or negative campaigns from either direction.
- **Competition and consolidation.** Well-funded new entrants, faster AI/agentic capability
  development by rivals, and industry consolidation could improve competitors' financial
  resources, merchandise access and market penetration.
- **Macroeconomic exposure.** Higher rates, fuel and energy prices, inflation or deflation,
  unemployment, weaker consumer purchasing power (including from reductions to government
  programs), currency moves, higher taxes, and tariffs/trade barriers can all depress demand,
  shift mix toward lower-margin goods, slow inventory turns and raise cost of sales.
- **Strategic alliances** may not generate anticipated sales or profitability.

### Operational

- **Suppliers and sourcing.** Political and economic instability where suppliers sit,
  supplier financial instability (including inability to honor indemnification obligations,
  leaving Walmart with the full cost of claims), labor problems, raw-material availability,
  extreme weather affecting growing/harvesting, transport availability and cost, and
  merchandise safety issues. **U.S. and international trade policy, tariffs, trade barriers
  and sanctions are explicitly beyond the company's control.**
- **Product quality and safety**, including recalls and foodborne illness, with liability
  falling on Walmart where suppliers cannot indemnify.
- **Third-party marketplace liability.** Regulators and courts increasingly treat the
  retailer as responsible for marketplace transactions; unsettled law on IP and product
  liability for marketplace goods creates additional exposure, including for counterfeit,
  pirated or stolen items.
- **Systems dependence and cybersecurity.** Information systems are described as *not fully
  redundant*, with disaster-recovery planning that cannot account for all eventualities.
  Threats include ransomware, denial-of-service and both cybercriminal and nation-state
  actors. The 10-K states that certain of Walmart's systems and those of third-party service
  providers **have experienced cybersecurity incidents and threats**, though as of the filing
  date the company was not aware of any that materially affected or are reasonably likely to
  materially affect the business. Personal and payment information — including health
  information from pharmacy and clinical operations — is processed at scale.
- **Payments** across cash, cards, EBT, mobile and private-label credit carry interchange,
  fraud and compliance exposure.
- **Health and wellness reimbursement.** A large majority of retail pharmacy net sales come
  from third-party payers and payment administrators; changes in reimbursement rates,
  contract terms or scope of offerings, or a disruption in pharmaceutical supply from a key
  vendor, could hit sales, gross margin and cash flow.
- **Labor.** Attracting and retaining ~2.1 million associates, wage and benefit inflation,
  and new or novel interpretations of labor law — particularly around **worker
  classification** — could raise costs materially.
- **Independent contractors and third-party service providers** could expose the company to
  liability despite background checks and qualification processes.
- **Natural disasters, climate, geopolitical events.** Hurricanes, floods, wildfires, winter
  storms, droughts, extreme temperatures; war, civil unrest, terrorism and active-shooter
  situations. Walmart bears the majority of adaptation costs and physical-damage losses. The
  10-K notes that because U.S. operations comprise a significant portion of performance, any
  event concentrated in the U.S. could be material.
- **Pandemics and epidemics**, including effects on the food supply such as avian flu on
  poultry and egg production.

### Financial

- **Market expectations.** The 10-K states plainly that the stock price "generally reflects
  high market expectations for our future operating results," and that failure or delay in
  meeting them could adversely affect the price and its volatility.
- **Foreign exchange.** International operations run in local currencies; unfavorable
  translation has already had adverse effects on reported results, and purchases denominated
  in non-local currencies add transaction exposure.

### Legal, tax, regulatory and compliance

- **International operations** (≈19% of consolidated net sales in fiscal 2026) carry
  country-specific legislative, judicial, tax, political and economic risk, including
  anti-corruption exposure where associates, contractors or agents act contrary to policy.
- **Tax and trade law.** U.S. segments generated ≈82% of consolidated net sales in fiscal
  2026, and a significant portion of general merchandise sold in U.S. stores and clubs is
  manufactured abroad. Changes to tax law, transfer-pricing arrangements, novel
  interpretations by taxing authorities, and routine domestic and foreign audits all bear on
  results.
- **Sector-specific regulation** across pharmacy/DEA controlled-substance rules, financial
  services (including the OnePay fintech venture — money transfers, digital payments, bill
  pay, money orders, check cashing, prepaid access, co-branded cards), antitrust,
  environmental, health and safety, and data privacy. VIZIO is subject to a stipulated order
  with the FTC and the New Jersey Attorney General **until 2037**.
- **Litigation.** Walmart is increasingly named in cases alleging improper retail pricing and
  supplier-cost practices, including purported class actions. Insurance-related liabilities —
  workers' compensation, general liability, auto, product liability and certain employee
  healthcare benefits — are **funded predominantly through self-insurance**.
- **Exclusive forum.** The bylaws designate the Delaware Court of Chancery as the sole forum
  for certain shareholder and derivative claims.

### Principal named legal matters

*From the contingencies notes and legal proceedings items of the FY2026 10-K
(accession 0000104169-26-000055) and the Q1 FY2027 10-Q (accession 0000104169-26-000102).*

- **Opioids.** Walmart settled with all 50 states, D.C., Puerto Rico, three territories and
  the vast majority of eligible subdivisions and tribes, accruing ≈**$3.3 billion** in fiscal
  2023; **all of that accrued liability had been paid as of January 31, 2025**. Unsettled
  matters continue: approximately 130 cases with claims against the company remained in the
  Northern District of Ohio MDL as of May 22, 2026 (approximately 230 as of March 6, 2026 per
  the 10-K), plus 13 other opioid cases in U.S. and Canadian courts. Four third-party-payer
  cases and one hospital-system case are MDL bellwethers. **No liability has been accrued for
  these ongoing matters and no loss or range of loss can be estimated.**
- **DOJ opioid civil litigation** (filed December 22, 2020, D. Del.) alleging unlawful
  dispensing and distribution under the Controlled Substances Act. Distribution claims and one
  dispensing theory were dismissed in March 2024; the remaining dispensing theory is pending,
  with **trial scheduled for November 2027**. A related False Claims Act qui tam action
  (transferred to D. Del. in July 2024) has a renewed motion to dismiss pending.
- **Asda equal value claims (UK).** Approximately **73,000** current and former Asda store
  employees claim their work is of equal value to distribution-centre work. Phases one and two
  are complete; tribunal rulings on January 31, 2025 and February 25, 2026 permitted certain
  claims to advance, and the **phase-three hearing is scheduled to begin November 23, 2026**.
  Asda was divested in February 2021, but Walmart still oversees the defense and **has agreed
  to indemnify certain claims up to a contractually determined amount**. No loss estimate.
- **Money transfer agent services.** Grand jury subpoenas from the U.S. Attorney's Office for
  the Middle District of Pennsylvania (most recent August 2020) into consumer fraud prevention
  and anti-money-laundering compliance; responses complete since 2021. No loss estimate.
- **Driver platform (Spark).** Walmart, the FTC and certain states settled investigations into
  Spark Driver payment and operational practices via a stipulated order entered **March 3,
  2026**: judgment of **$100 million**, with roughly **$63 million suspended** and
  approximately **$37 million** accrued as of January 31, 2026, plus programmatic and
  reporting obligations **for 10 years**. Discussions continue with certain other states, and
  separate driver-classification litigation and arbitrations remain.
- **Mexico antitrust (COFECE).** December 12, 2024 split decision found a single relative
  monopolistic practice regarding two types of supplier contributions; penalty of **93.4
  million pesos (≈$5 million)** plus conduct measures. Walmex appealed in January 2025;
  payment is stayed pending resolution.
- **India — Flipkart FDI.** A July 2021 show-cause notice from the Directorate of Enforcement
  covers alleged violations from 2009–2015, before Walmart's 2018 majority acquisition, with
  further information requests including one in April 2025. Potential relief includes monetary
  penalties and non-monetary measures such as **share ownership restrictions**.
- **India antitrust (CCI).** Investigation opened January 13, 2020; the Director General's
  report alleging competition-law violations by Flipkart subsidiaries was received in a
  non-confidential version on September 13, 2024. CCI's final order could include monetary and
  non-monetary relief.
- **Environmental.** October 2023 EPA Finding of Violation alleging Clean Air Act violations
  tied to the refrigeration leak detection and repair program.

---

## Management's discussion and analysis — fiscal 2026

*From Item 7 of the FY2026 10-K, accession 0000104169-26-000055.*

### Framing

Management runs to three financial priorities: **Growth** (serve customers through a seamless
omnichannel experience), **Margin** (improve operating margin via productivity plus category
and business mix), and **Returns** (improve ROI through margin improvement and disciplined
capital spend). Management flags continued uncertainty from tariffs and trade restrictions,
inflation, currency swings, consumer confidence, employment trends, fuel volatility and
supply-chain pressure. Pricing responses to cost increases range from absorbing them, cutting
prices in certain categories and protecting opening price points in food, through to passing
costs on when necessary; merchandising responses include working with suppliers to share cost
increases, leaning on private label and smaller pack sizes, buying earlier and in greater
volume (or moderating), and securing ocean carrier and container capacity. The One Big
Beautiful Bill Act, enacted July 2025, brought 100% bonus depreciation and full R&D expensing;
the income-statement impact was not material, but certain provisions **decreased cash taxes
paid in fiscal 2026** and may change the timing of future cash tax payments.

### Consolidated results

- Total revenues rose **$32.2 billion, or 4.7%**, to $713.2 billion (fiscal 2025: +$32.9B,
  +5.1%). Net sales rose **$31.9 billion, or 4.7%**, to $706.4 billion. Currency translation
  was a **$2.8 billion headwind** (fiscal 2025: $3.2 billion).
- Membership and other income rose $0.3 billion, driven by global membership fee growth,
  partly offset by lower recycling income.
- **Gross profit rate up 8 bps** — led by Walmart U.S. on disciplined inventory management and
  growth in higher-margin businesses globally, partly offset by mix shifts into lower-margin
  merchandise and by channel/format mix in International. (Fiscal 2025: +40 bps.)
- **Operating expense rate up 20 bps**, driven by ≈**$0.9 billion** higher self-insured
  general liability claims expense in the U.S. (rising costs to resolve claims across retail
  and related industries), a **$0.7 billion** charge from modifying share-based compensation
  arrangements at PhonePe in contemplation of a potential public offering, and higher
  depreciation from capital investment.
- **Operating margin down 13 bps** (fiscal 2025: +15 bps).
- Other gains and losses swung to a **net gain of $2.1 billion** from a $0.8 billion net loss,
  chiefly fair-value changes on equity and other investments.
- **Effective tax rate 24.4%** (23.4% in fiscal 2025, 25.5% in fiscal 2024). The increase
  reflects the PhonePe share-based compensation charge, which carried no tax benefit.
- **Consolidated net income $22.3 billion**, up $2.1 billion. **Diluted EPS $2.73** vs. $2.41
  and $1.91 in fiscal 2025 and 2024.

### Segment results

| | Fiscal 2026 net sales | Change | Comparable sales | Operating income change |
|---|---|---|---|---|
| Walmart U.S. | $483.0B | +$20.6B / +4.4% | +4.3% | +$1.3B |
| Walmart International | $130.4B | +$8.5B / +7.0% | n/a | −$0.4B |
| Sam's Club U.S. | $93.0B | +$2.8B / +3.1% | +2.9% (incl. fuel) | up slightly |

- **Walmart U.S.**: comps driven by growth in both average ticket and transactions, with unit
  volume growth and strength across all merchandise categories. eCommerce contributed **≈4.3
  points** to comps (2.9 points in fiscal 2025), led by store-fulfilled pickup and delivery.
  Gross margin +22 bps; operating expense rate +15 bps on self-insured general liability and
  depreciation. Membership and other income rose only slightly, with double-digit Walmart+ fee
  growth offset by lower recycling income.
- **Walmart International**: growth included **$6.3 billion** of eCommerce growth, offset by
  the $2.8 billion currency headwind. **Gross margin fell 49 bps** on channel and format mix
  plus strategic investment in price and delivery capability. Operating expense rate +10 bps
  driven by the **$0.7 billion PhonePe** charge. Segment operating income declined.
- **Sam's Club U.S.**: comps driven by unit volumes and transactions, with strength in grocery,
  health and wellness and general merchandise, but **lower fuel sales cut comps by 1.9 points**
  on lower fuel prices. eCommerce contributed ≈3.3 points to comps. Membership and other income
  +8.7% on membership base growth and Plus penetration, helped by breakage income on unredeemed
  Sam's Cash. Gross margin +4 bps; operating expense rate +22 bps on lower fuel sales and higher
  self-insured general liability claims.

### Returns, capital and cash

- **ROA 8.2%** (7.9% in fiscal 2025) — higher net income on investment fair-value gains and
  operating income, against a larger asset base from heavier property and equipment purchases.
- **ROI 15.1%**, down from 15.5%, because average invested capital grew faster than the
  operating-income benefit; ROI was also held back by the PhonePe non-cash charge and by legal
  and business restructuring charges.
- **Capital expenditures $26.6 billion** (fiscal 2025: $23.8 billion), allocated as: supply
  chain, customer-facing initiatives, technology and other **$16.5B**; store and club remodels
  **$5.6B**; new stores and clubs including expansions and relocations **$1.4B** (up sharply
  from $0.45B); total U.S. **$23.4B**; Walmart International **$3.2B**.
- Operating cash flow rose **$5.1 billion** on higher operating income, lower cash taxes and
  payment timing. Free cash flow improved despite the **$2.9 billion** capex increase.
- **Cash and equivalents $10.7 billion** (from $9.0 billion). **Working capital deficit
  $22.6 billion**, widened from $17.1 billion by payment timing and higher short-term
  borrowings. Management characterizes the deficit as normal given efficient cash use and
  consistent capital-markets access. **$3.9 billion** of cash may not be freely transferable to
  the U.S.
- Short-term borrowings **$6.6 billion** at a 4.0% weighted-average rate (vs. $3.1 billion at
  5.3%), against **$15.0 billion of undrawn committed U.S. lines**; $1.7 billion of letters of
  credit issued against a $2.0 billion facility.
- Estimated contractual interest on long-term debt **$17.3 billion**, ≈$1.7 billion payable in
  fiscal 2027. Unrecorded purchase obligations **$41.4 billion**, of which **$18.3 billion** is
  due within one year.
- **Dividends paid $7.5 billion** (fiscal 2025 $6.7B, fiscal 2024 $6.1B). Effective February 19,
  2026 the board approved a **fiscal 2027 annual dividend of $0.99** per share, up from $0.94.
- **Buybacks:** all fiscal 2026 repurchases ran under the $20.0 billion program authorized in
  November 2022, which had **$4.0 billion** of capacity left at January 31, 2026. In February
  2026 the board approved a **new $30.0 billion authorization**, effective February 23, 2026,
  with no expiration. Management expects a majority of ongoing repurchases to be funded from
  free cash flow.
- **Fiscal 2027 capital expenditures are projected at approximately $25 billion to $27
  billion**, focused on technology, supply chain and customer-facing initiatives.
- Critical accounting estimates are contingencies (loss accrual and disclosure judgments) and
  uncertain tax positions.

### Market risk (Item 7A)

Exposures are interest rates, currency and the fair value of certain equity and equity-method
investments. At January 31, 2026, variable-rate borrowings including commercial paper and
interest-rate swaps were **27% of total short- and long-term debt**. Long-term debt totaled
$37.4 billion fixed (4.1% weighted-average rate) plus $0.75 billion variable, with **$23.3
billion maturing after fiscal 2031**. Interest-rate swaps of $4.8 billion notional convert
fixed to variable. Currency swaps were in a **$0.9 billion liability position** (from $1.4
billion a year earlier).

---

## Current quarter — Q1 fiscal 2027 (three months ended April 30, 2026)

*From the Q1 FY2027 10-Q, accession 0000104169-26-000102, with results-release detail from the
Form 8-K filed May 21, 2026, accession 0000104169-26-000095.*

### Headline results

| | Q1 FY27 | Q1 FY26 | Change |
|---|---|---|---|
| Net sales | $175,684M | $163,981M | +7.1% |
| Membership and other income | $2,067M | $1,628M | +27.0% |
| Total revenues | $177,751M | $165,609M | +7.3% |
| Gross profit | $42,626M | $39,678M | +7.4% |
| Operating expenses | $37,200M | $34,171M | +8.9% |
| Operating income | $7,493M | $7,135M | +5.0% |
| Other (gains) and losses | $(275)M | $597M | swing |
| Consolidated net income | $5,490M | $4,639M | +$0.9B |
| Diluted EPS (Walmart) | $0.67 | $0.56 | +$0.11 |

Gross margin 24.3% of net sales (+6 bps); operating expense rate 21.2% (+33 bps); operating
margin 4.3% (−8 bps). Effective tax rate **23.2%** vs. 22.6%. Unit count 10,974; retail square
feet 1,057 million. Adjusted EPS of **$0.66** excludes a net $0.02 investment gain and $0.01 of
business reorganization charges.

### What actually moved

- **eCommerce net sales grew $8.5 billion, or 26%**, led by store- and club-fulfilled delivery
  and marketplace — the single largest driver of the revenue beat over the prior year.
- **Global advertising was up 37%**, with Walmart U.S. advertising up 36%. **Membership fee
  revenue grew 17.4%** globally.
- Currency was a **$2.3 billion tailwind** this quarter, reversing the prior-year pattern —
  which is most of why International's reported growth looks outsized.
- **Operating expense pressure** came from higher depreciation on capital investment,
  **$0.2 billion of business reorganization charges** in Walmart U.S. and Corporate tied to
  aligning global platforms, and higher associate healthcare benefit costs from increased
  enrollment and medical cost inflation.
- Operating income growth was **negatively affected by ~250 bps from higher fuel costs in
  distribution and fulfillment**.
- Other gains and losses swung to a **$275 million net gain** from a $597 million net loss,
  chiefly investment fair-value changes — a reminder that a meaningful slice of the year-over-
  year net income increase is non-operating.
- Beginning February 2026, corporate overhead allocations to segments changed; prior-period
  segment amounts were revised for comparability.

### By segment

- **Walmart U.S.** — net sales **$117,169M, +4.5%**; calendar comps **+4.3%** on transactions
  and average ticket, with strength in grocery and general merchandise; eCommerce contributed
  ≈**5.2 points**. Gross margin **+29 bps** on merchandise mix and higher-margin businesses
  including advertising, partly offset by higher supply-chain fuel costs. Operating expense
  rate +56 bps. Operating income **$5,897M, +$0.2B**. Membership and other income +45.6%,
  helped by miscellaneous items plus double-digit Walmart+ fee growth.
- **Walmart International** — net sales **$35,110M, +18.0%**, of which **$2.3 billion** was
  currency and **$2.0 billion** was eCommerce growth. Gross margin flat. Operating expense rate
  **−28 bps** on cost discipline and format mix, partly offset by investment in Canada and
  Mexico. Operating income **$1,602M, +$0.3B**.
- **Sam's Club U.S.** — net sales **$23,405M, +6.1%**; comps including fuel **+5.9%**, with
  **fuel adding 2.1 points** on higher prices and volumes (the reverse of fiscal 2026's drag);
  eCommerce contributed ≈3.1 points. **Gross margin −26 bps** on higher eCommerce fulfillment
  costs from club-fulfilled delivery. Operating expense rate flat. Operating income **$674M**,
  up only slightly. Membership and other income +11.0%.

### Balance sheet, cash and capital

- **Operating cash flow $4.7 billion**, down $0.7 billion on inventory receipt timing.
  **Capital expenditures $6,684M** (vs. $4,986M), so **free cash flow was negative $1.9
  billion**, a $2.4 billion year-over-year decline. Q1 is seasonally the weakest cash quarter,
  but the capex step-up is the larger factor.
- **Inventory $62.6 billion, +8.9%** (+7.8% constant currency), on receipt timing, strong unit
  demand in Walmart U.S. grocery, and fuel.
- Cash and equivalents **$10.7 billion**; **$5.0 billion** of it may not be freely transferable
  to the U.S. (up from $3.9 billion at January 31, 2026). **Working capital deficit $26.2
  billion**, widened from $22.7 billion a year earlier.
- **Total debt $58.1 billion.** Long-term debt including current maturities rose to **$40,783M**
  from $38,166M. On **April 30, 2026** Walmart issued **$4.23 billion net** of senior unsecured
  notes for general corporate purposes: $350M floating-rate due 2029; $650M at 4.000% due 2029;
  $1,000M at 4.150% due 2031; $1,250M at 4.450% due 2033; $1,000M at 4.750% due 2036 (offering
  terms in the Form 8-K filed April 30, 2026, accession 0001193125-26-194086). Repayments
  totalled $1,504M: €650M 2.550% notes on April 8, 2026 and $750M 4.000% notes on April 15,
  2026. The new notes carry **no financial covenants** and do not restrict dividends or
  buybacks.
- In April 2026 Walmart **renewed and extended its $10.0 billion 364-day and $5.0 billion
  five-year revolving credit facilities**; total committed U.S. lines of $15.0 billion, all
  undrawn.
- **Repurchased 16.68 million shares for $2.1 billion** at average prices of $127.23 (February),
  $123.83 (March) and $126.89 (April) — a $2.5 billion decrease from the prior-year quarter,
  which had been elevated by opportunistic buying. **$28.2 billion of authorization remained**
  at April 30, 2026.
- **Dividends declared $0.99 per share ($7,896M)** in the quarter, recorded in full at
  declaration.
- **TTM ROA 8.4%** (from 7.5%); **TTM ROI 14.9%** (from 15.3%), the ROI decline again driven by
  higher average invested capital from property and equipment purchases, plus the PhonePe
  charge, reorganization charges and legal matters in the trailing period.

### Tariffs

Management notes it operates in a highly dynamic tariff environment but that **less than one
third of what it sells in the U.S. is imported**, with most imports from China, Vietnam,
Mexico, India and Canada. Walmart is participating in the U.S. Customs and Border Protection
process for refunds of tariffs it paid as importer of record under the International Emergency
Economic Powers Act. **Timing, amounts and ultimate resolution remain uncertain, and no amounts
were recognized in the quarter** — so any refund would be upside not currently in the numbers.

### Guidance

*From the Form 8-K filed May 21, 2026 (accession 0000104169-26-000095) and, for the unchanged
full-year outlook, the Form 8-K filed February 19, 2026 (accession 0000104169-26-000032).*

- **Q2 fiscal 2027:** net sales up **4% to 5%** constant currency; adjusted operating income up
  **7% to 10%** constant currency; adjusted EPS **$0.72 to $0.74**.
- **Full-year fiscal 2027 outlook reiterated, unchanged:** net sales up **3.5% to 4.5%**
  constant currency; adjusted operating income up **6.0% to 8.0%** constant currency; net
  interest expense up approximately **$200M to $300M**; effective tax rate approximately
  **23.5% to 24.5%**; adjusted EPS **$2.75 to $2.85**; capital expenditures approximately
  **3.5% of net sales**. The full-year framework is built off fiscal 2026 net sales of $706.4
  billion, adjusted operating income of $31.0 billion and adjusted EPS of $2.64.

Note that the guided adjusted-operating-income growth of 6–8% for the full year sits above the
5.0% reported in Q1, and the guided Q2 range of 7–10% implies management expects the fuel and
reorganization drags to ease.

### No change to risk factors

The Q1 FY2027 10-Q states that **no material change** occurred in the risk factors disclosed in
the FY2026 10-K.

---

## Subsequent events

The Q1 fiscal 2027 10-Q (accession 0000104169-26-000102) does **not** contain a separate
subsequent-events note; its notes end with segments and disaggregated revenue. **No
acquisitions, divestitures, or post-period financings were disclosed.** The material
post-period items that are disclosed across the filings are:

- **Sam's Club U.S. membership fee increase, effective May 1, 2026** — Club memberships rose
  from **$50 to $60** per year and Plus memberships from **$110 to $120** per year. Because
  membership fees are deferred and recognized ratably over the one-year term, the benefit
  builds gradually through fiscal 2027 and beyond rather than landing at once. (Disclosed in
  the 10-Q's discussion of the Sam's Club U.S. segment.)
- **Opioid litigation outcome — May 26, 2026.** In the Florida Health Sciences Center case
  (Florida state court, asserting claims on behalf of several hospital systems), following a
  jury trial that ended in a mistrial on December 8, 2025, the court **granted a directed
  verdict and entered judgment in favor of Walmart and the other defendants**. (Disclosed in
  the 10-Q contingencies note.)
- **Fiscal 2027 dividend schedule.** The subsequent-event note of the FY2026 10-K (accession
  0000104169-26-000055) records the board's approval, effective February 19, 2026, of the
  fiscal 2027 annual dividend of **$0.99 per share**, payable in four quarterly installments of
  **$0.2475**: record March 20, 2026 / payable April 6, 2026; record May 8 / payable May 26,
  2026; record August 21 / payable September 8, 2026; record December 11, 2026 / payable
  January 4, 2027.
- **Annual shareholders' meeting, June 4, 2026.** Shareholders approved an amendment to the
  Restated Certificate of Incorporation **limiting the liability of certain officers** to the
  fullest extent permitted under Delaware law (officer exculpation). The charter amendment and
  a Restated Certificate were filed with the Delaware Secretary of State on June 4, 2026 and
  became effective upon filing. (Form 8-K filed June 5, 2026, accession 0000104169-26-000111.)
- **CEO trading plan, May 29, 2026.** John Furner, President and CEO, entered a Rule 10b5-1
  trading plan to sell **up to 236,250 shares** in equal monthly trades from September 2026
  through February 2028; the plan terminates February 17, 2028. Earlier in the quarter,
  director and former CEO C. Douglas McMillon (March 10, 2026) adopted a plan for **155,328
  shares** running June 2026 through January 2027; Daniel J. Bartlett (March 12, 2026) for up
  to **$15,000,000** of stock from July 2026 through July 1, 2029; David Guggina (March 12,
  2026) for up to **21,108** shares net of tax withholding; and Suresh Kumar (March 27, 2026)
  for up to **199,610** shares from June 2026 through December 2026, subject to a minimum price
  threshold.