Overview


This discussion, which presents Walmart Inc.'s ("Walmart," the "Company," "our,"
or "we") results for periods occurring in the fiscal year ending January 31,
2022 ("fiscal 2022") and the fiscal year ended January 31, 2021 ("fiscal 2021"),
should be read in conjunction with our Condensed Consolidated Financial
Statements as of and for the three and nine months ended October 31, 2021, and
the accompanying notes included in   Part I, Item 1   of this Quarterly Report
on Form 10-Q, as well as our Consolidated Financial Statements as of and for the
year ended January 31, 2021, the accompanying notes and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations,
contained in our Annual Report on Form 10-K for the year ended January 31, 2021.
We intend for this discussion to provide the reader with information that will
assist in understanding our financial statements, the changes in certain key
items in those financial statements from period to period and the primary
factors that accounted for those changes. We also discuss certain performance
metrics that management uses to assess the Company's performance. Additionally,
the discussion provides information about the financial results of each of the
three segments of our business to provide a better understanding of how each of
those segments and its results of operations affect the financial condition and
results of operations of the Company as a whole.
Throughout this Management's Discussion and Analysis of Financial Condition and
Results of Operations, we discuss segment operating income, comparable store and
club sales and other measures. Management measures the results of the Company's
segments using each segment's operating income, including certain corporate
overhead allocations, as well as other measures. From time to time, we revise
the measurement of each segment's operating income and other measures as
determined by the information regularly reviewed by our chief operating decision
maker.
Comparable store and club sales, or comparable sales, is a metric that indicates
the performance of our existing stores and clubs by measuring the change in
sales for such stores and clubs, including eCommerce sales, for a particular
period from the corresponding prior year period. Walmart's definition of
comparable sales includes sales from stores and clubs open for the previous 12
months, including remodels, relocations, expansions and conversions, as well as
eCommerce sales. We measure the eCommerce sales impact by including all sales
initiated digitally, including omni-channel transactions which are fulfilled
through our stores and clubs. Sales at a store that has changed in format are
excluded from comparable sales when the conversion of that store is accompanied
by a relocation or expansion that results in a change in the store's retail
square feet of more than five percent. Sales related to divested businesses are
excluded from comparable sales, and sales related to acquisitions are excluded
until such acquisitions have been owned for 12 months. Comparable sales are also
referred to as "same-store" sales by others within the retail industry. The
method of calculating comparable sales varies across the retail industry. As a
result, our calculation of comparable sales is not necessarily comparable to
similarly titled measures reported by other companies.
In discussing our operating results, the term currency exchange rates refers to
the currency exchange rates we use to convert the operating results for
countries where the functional currency is not the U.S. dollar into U.S.
dollars. We calculate the effect of changes in currency exchange rates as the
difference between current period activity translated using the current period's
currency exchange rates and the comparable prior year period's currency exchange
rates. Additionally, no currency exchange rate fluctuations are calculated for
non-USD acquisitions until owned for 12 months. Throughout our discussion, we
refer to the results of this calculation as the impact of currency exchange rate
fluctuations. Volatility in currency exchange rates may impact the results,
including net sales and operating income, of the Company and the Walmart
International segment in the future.
Each of our segments contributes to the Company's operating results differently.
Each, however, has generally maintained a consistent contribution rate to the
Company's net sales and operating income in recent years other than minor
changes to the contribution rate for the Walmart International segment due to
fluctuations in currency exchange rates. Consistent with our strategy to
strengthen our Walmart International portfolio for the long-term, we completed
the following actions during the nine months ended October 31, 2021:
•Completed the sale of Asda, our retail business in the U.K., for net
consideration of $9.6 billion in February 2021. During the first quarter of
fiscal 2022, we recognized an incremental non-cash loss of $0.2 billion, after
tax, primarily due to changes in the net assets of the disposal group, currency
exchange rate fluctuations and customary purchase price adjustments upon
closing.
•Completed the sale of Seiyu, our retail business in Japan, for net
consideration of $1.2 billion in March 2021. During the first quarter of fiscal
2022, we recognized an incremental non-cash loss of $0.2 billion, after tax,
primarily due to changes in the net assets of the disposal group, currency
exchange rate fluctuations and customary purchase price adjustments upon
closing.
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We operate in the highly competitive omni-channel retail industry in all of the
markets we serve. We face strong sales competition from other discount,
department, drug, dollar, variety and specialty stores, warehouse clubs and
supermarkets, as well as eCommerce businesses. Many of these competitors are
national, regional or international chains or have a national or international
omni-channel or eCommerce presence. We compete with a number of companies for
attracting and retaining quality employees ("associates"). We, along with other
retail companies, are influenced by a number of factors including, but not
limited to: catastrophic events, weather and other risks related to climate
change, global health epidemics, including the ongoing COVID-19 pandemic,
competitive pressures, consumer disposable income, consumer debt levels and
buying patterns, consumer credit availability, supply chain disruptions, cost
and availability of goods, currency exchange rate fluctuations, customer
preferences, deflation, inflation, fuel and energy prices, general economic
conditions, insurance costs, interest rates, labor availability and costs, tax
rates, the imposition of tariffs, cybersecurity attacks and unemployment.
Further information on the factors that can affect our operating results and on
certain risks to our Company and an investment in our securities can be found
herein under "  Item 5. Other Information  ."
We expect continued uncertainty in our business and the global economy due to
the duration and intensity of the COVID-19 pandemic; the duration and extent of
economic stimulus measures; timing and effectiveness of global vaccines, as well
as potential impacts of any related vaccine mandates on our workforce; supply
chain disruptions; and volatility in employment trends and consumer confidence
which may impact our results. For a detailed discussion on results of operations
by reportable segment, refer to "  Results of Operations  " below.

Company Performance Metrics
We are committed to helping customers save money and live better through
everyday low prices, supported by everyday low costs.  At times, we adjust our
business strategies to maintain and strengthen our competitive positions in the
countries in which we operate.  We define our financial framework as:
•strong, efficient growth;
•consistent operating discipline; and
•strategic capital allocation.
As we execute on this financial framework, we believe our returns on capital
will improve over time.
Strong, Efficient Growth
Our objective of prioritizing strong, efficient growth means we will focus on
the most productive growth opportunities, increasing comparable store and club
sales, accelerating eCommerce sales growth and expansion of omni-channel
initiatives while slowing the rate of growth of new stores and clubs. At times,
we make strategic investments which are focused on the long-term growth of the
Company.
Comparable sales is a metric that indicates the performance of our existing
stores and clubs by measuring the change in sales for such stores and clubs,
including eCommerce sales, for a particular period over the corresponding period
in the previous year. The retail industry generally reports comparable sales
using the retail calendar (also known as the 4-5-4 calendar). To be consistent
with the retail industry, we provide comparable sales using the retail calendar
in our quarterly earnings releases. However, when we discuss our comparable
sales below, we are referring to our calendar comparable sales calculated using
our fiscal calendar, which may result in differences when compared to comparable
sales using the retail calendar.
Calendar comparable sales, as well as the impact of fuel, for the three and nine
months ended October 31, 2021 and 2020, were as follows:
                                                      Three Months Ended October 31,                                             Nine Months Ended October 31,
                                       2021              2020               2021               2020               2021              2020               2021               2020
                                             With Fuel                            Fuel Impact                           With Fuel                            Fuel Impact
Walmart U.S.                             9.4  %            6.6  %             0.4  %            (0.1) %             6.7  %            8.9  %             0.4  %            (0.2) %
Sam's Club                              19.6  %            8.3  %             5.9  %            (3.3) %            14.6  %            8.9  %             5.4  %            (3.8) %
Total U.S.                              11.0  %            6.8  %             1.3  %            (0.6) %             7.9  %            8.9  %             1.2  %            (0.7) %


Comparable sales in the U.S., including fuel, increased 11.0% and 7.9% for the
three and nine months ended October 31, 2021, respectively, when compared to the
same periods in the previous fiscal year. The Walmart U.S. segment had
comparable sales growth of 9.4% and 6.7% for the three and nine months ended
October 31, 2021, respectively, driven by growth in transactions and average
ticket, which includes strong consumer spending from government stimulus and
some higher inflation impacts in certain merchandise categories compared to
recent years. In the first quarter of fiscal 2022, average ticket increased
while transactions decreased as customers consolidated shopping trips and
purchased larger baskets. Transaction growth turned positive in April 2021 and
continued with strong growth through the second and third quarters of fiscal
2022 as customers' pre-pandemic behaviors largely resumed. The Walmart U.S.
segment's eCommerce sales grew at a slower rate than total comparable sales
which negatively contributed approximately 0.1% to comparable sales for the
three months ended October 31,
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2021 as customers shifted toward more in-store shopping as compared to the same
period in the previous year. For the nine months ended October 31, 2021,
eCommerce sales positively contributed approximately 1.3% to comparable sales,
primarily driven by store pick-up and delivery.
Comparable sales at the Sam's Club segment increased 19.6% and 14.6% for the
three and nine months ended October 31, 2021, respectively. Growth in comparable
sales benefited from growth in transactions and average ticket and was aided by
consumer spending due to government stimulus, and also includes some higher
inflation impacts in certain merchandise categories compared to recent years.
The growth in comparable sales was partially offset by our decision to remove
tobacco from certain club locations. The Sam's Club segment's eCommerce sales
positively contributed approximately 1.1% and 1.7% to comparable sales for the
three and nine months ended October 31, 2021, respectively.
Consistent Operating Discipline
We operate with discipline by managing expenses and optimizing the efficiency of
how we work and creating an environment in which we have sustainable lowest cost
to serve. We invest in technology and process improvements to increase
productivity, manage inventory, and reduce costs. We measure operating
discipline through expense leverage, which we define as net sales growing at a
faster rate than operating, selling, general and administrative ("operating")
expenses.
                                                             Three Months Ended October 31,               Nine Months Ended October 31,
(Amounts in millions)                                            2021                  2020                  2021                  2020
Net sales                                                 $      139,207           $ 133,752          $      416,237           $ 404,248
Percentage change from comparable period                             4.1   %             5.3  %                  3.0   %             6.6  %
Operating, selling, general and administrative            $       29,710           $  28,591          $       86,350           $  84,957

expenses


Percentage change from comparable period                             3.9   %             4.4  %                  1.6   %             5.9  %
Operating, selling, general and administrative                      21.3   %            21.4  %                 20.7   %            21.0  %

expenses as a percentage of net sales




Operating expenses as a percentage of net sales was relatively flat for the
three months ended October 31, 2021, which benefited from growth in net sales
and $0.2 billion of lower incremental COVID-19 related costs as compared to the
same period in the prior year, offset by increased wage investments primarily in
the Walmart U.S. segment. Operating expenses as a percentage of net sales
decreased 27 basis points for the nine months ended October 31, 2021, primarily
driven by net sales growth and lower incremental COVID-19 related costs of $2.0
billion as compared to the same period in the prior year, partially offset by
increased wage investments primarily in the Walmart U.S. segment.
Strategic Capital Allocation
Our strategy includes improving our customer-facing initiatives in stores and
clubs and creating a seamless omni-channel experience for our customers. As
such, we are allocating more capital to supply chain, customer-facing
initiatives, technology and store remodels, and less to new store and club
openings. The following table provides additional detail:
                                                                                Nine Months Ended
(Amounts in millions)                                                              October 31,
Allocation of Capital Expenditures                                                       2021              2020
Supply chain, customer-facing initiatives and technology                              $  4,408          $  3,316
Store and club remodels                                                                  2,375             1,531
New stores and clubs, including expansions and relocations                                 112                64
Total U.S.                                                                               6,895             4,911
Walmart International                                                                    1,693             1,527
Total Capital Expenditures                                                            $  8,588          $  6,438



Returns
As we execute our financial framework, we believe our return on capital will
improve over time. We measure return on capital with our return on investment
and free cash flow metrics. In addition, we provide returns in the form of share
repurchases and dividends, which are discussed in the   Liquidity and Capital
Resources   section.
Return on Assets and Return on Investment
We include Return on Assets ("ROA"), the most directly comparable measure based
on our financial statements presented in accordance with generally accepted
accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as
metrics to assess returns on assets. While ROI is considered a non-GAAP
financial measure, management believes ROI is a meaningful metric to share with
investors because it helps investors assess how effectively Walmart is deploying
its assets. Trends in ROI can fluctuate over time as management balances
long-term strategic initiatives with possible short-term impacts. ROA was 3.3%
and 8.2% for the trailing twelve months ended October 31, 2021 and 2020,
respectively. The decrease in ROA was primarily due to net fair value changes in
our equity instruments as well as the losses on divestiture of our operations in
the
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U.K. and Japan, partially offset by the increase in operating income. ROI was
14.5% and 13.7% for the trailing twelve months ended October 31, 2021 and 2020.
The increase in ROI was primarily due to the increase in operating income.
We define ROI as adjusted operating income (operating income plus interest
income, depreciation and amortization, and rent expense) for the trailing 12
months divided by average invested capital during that period. We consider
average invested capital to be the average of our beginning and ending total
assets, plus average accumulated depreciation and amortization, less average
accounts payable and average accrued liabilities for that period.
Our calculation of ROI is considered a non-GAAP financial measure because we
calculate ROI using financial measures that exclude and include amounts that are
included and excluded in the most directly comparable GAAP financial measure.
For example, we exclude the impact of depreciation and amortization from our
reported operating income in calculating the numerator of our calculation of
ROI. As mentioned above, we consider ROA to be the financial measure computed in
accordance with GAAP most directly comparable to our calculation of ROI. ROI
differs from ROA (which is consolidated net income for the period divided by
average total assets for the period) because ROI: adjusts operating income to
exclude certain expense items and adds interest income; and adjusts total assets
for the impact of accumulated depreciation and amortization, accounts payable
and accrued liabilities to arrive at total invested capital. Because of the
adjustments mentioned above, we believe ROI more accurately measures how we are
deploying our key assets and is more meaningful to investors than ROA. Although
ROI is a standard financial measure, numerous methods exist for calculating a
company's ROI. As a result, the method used by management to calculate our ROI
may differ from the methods used by other companies to calculate their ROI.
The calculation of ROA and ROI, along with a reconciliation of ROI to the
calculation of ROA, the most comparable GAAP financial measure, is as follows:
                                                                            

For the Trailing Twelve Months


                                                                                       Ending October 31,
(Amounts in millions)                                                                2021                 2020
CALCULATION OF RETURN ON ASSETS
Numerator
Consolidated net income                                                        $     8,299            $  20,008

Denominator


Average total assets(1)                                                        $   247,857            $ 245,347
Return on assets (ROA)                                                                 3.3    %             8.2  %

CALCULATION OF RETURN ON INVESTMENT
Numerator
Operating income                                                               $    25,542            $  22,383
+ Interest income                                                                      141                  132
+ Depreciation and amortization                                                     10,771               11,161
+ Rent                                                                               2,360                2,646
= ROI operating income                                                         $    38,814            $  36,322

Denominator
Average total assets(1)                                                        $   247,857            $ 245,347
'+ Average accumulated depreciation and amortization(1)                             99,872               95,637
'- Average accounts payable(1)                                                      55,654               51,951
 - Average accrued liabilities(1)                                                   24,735               22,984
= Average invested capital                                                     $   267,340            $ 266,049
Return on investment (ROI)                                                            14.5    %            13.7  %


 (1) The average is based on the addition of the account balance at the end of
the current period to the account balance at the end of the prior period and
dividing by 2.
                                                           As of October 31,
                                                  2021           2020           2019
Certain Balance Sheet Data
Total assets                                   $ 244,851      $ 250,863      $ 239,830
Accumulated depreciation and amortization        100,168         99,576         91,697
Accounts payable                                  57,156         54,152         49,750
Accrued liabilities                               24,474         24,995         20,973







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Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes,
however, that free cash flow, which measures our ability to generate cash from
our business operations, is an important financial measure for use in evaluating
the Company's financial performance. Free cash flow should be considered in
addition to, rather than as a substitute for, consolidated net income as a
measure of our performance and net cash provided by operating activities as a
measure of our liquidity. See   Liquidity and Capital Resources   for
discussions of GAAP metrics including net cash provided by operating activities,
net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a
period minus payments for property and equipment made in that period. We had net
cash provided by operating activities of $16.3 billion for the nine months ended
October 31, 2021, which decreased when compared to $22.9 billion for the nine
months ended October 31, 2020 primarily due to an increase in inventory
purchases to support strong sales and lapping the impact of accelerated
inventory sell-through in fiscal 2021, as well as timing and payment of wages.
We generated free cash flow of $7.7 billion for the nine months ended
October 31, 2021, which decreased when compared to $16.4 billion for the nine
months ended October 31, 2020 due to the same reasons as the decrease in net
cash provided by operating activities, as well as $2.2 billion in increased
capital expenditures.
Walmart's definition of free cash flow is limited in that it does not represent
residual cash flows available for discretionary expenditures due to the fact
that the measure does not deduct the payments required for debt service and
other contractual obligations or payments made for business acquisitions.
Therefore, we believe it is important to view free cash flow as a measure that
provides supplemental information to our Condensed Consolidated Statements of
Cash Flows.
Although other companies report their free cash flow, numerous methods may exist
for calculating a company's free cash flow. As a result, the method used by
management to calculate our free cash flow may differ from the methods used by
other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP
financial measure, to net cash provided by operating activities, which we
believe to be the GAAP financial measure most directly comparable to free cash
flow, as well as information regarding net cash used in investing activities and
net cash used in financing activities.
                                                                                    Nine Months Ended October 31,
(Amounts in millions)                                                                                                         2021              2020
Net cash provided by operating activities                                                                                  $ 16,291          $ 22,880
Payments for property and equipment                                                                                          (8,588)           (6,438)
Free cash flow                                                                                                             $  7,703          $ 16,442

Net cash used in investing activities(1)                                                                                   $ (1,530)         $ (6,507)
Net cash used in financing activities                                                                                       (18,113)          (11,340)


(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.


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Results of Operations
Consolidated Results of Operations
                                                     Three Months Ended October 31,            Nine Months Ended October 31,
(Amounts in millions, except unit counts)               2021                2020                  2021                   2020
Total revenues                                      $  140,525          $ 134,708          $       419,883           $ 407,072
Percentage change from comparable period                     4.3%               5.2%                   3.1   %               6.5%
Net sales                                           $  139,207          $ 133,752          $       416,237           $ 404,248
Percentage change from comparable period                     4.1%               5.3%                   3.0   %               6.6%
Total U.S. calendar comparable sales increase               11.0%               6.8%                   7.9   %               8.9%
Gross profit margin as a percentage of net                  24.6%              25.0%                  24.7   %              24.5%

sales


Operating income                                    $    5,792          $   5,778          $        20,055           $  17,061
Operating income as a percentage of net sales                4.2%               4.3%                   4.8   %               4.2%
Loss on extinguishment of debt                      $    2,410          $       -          $         2,410           $       -
Other (gains) and losses                            $   (1,207)         $  (1,853)         $         2,275           $  (5,796)
Consolidated net income                             $    3,132          $   5,201          $        10,307           $  15,714
Unit counts at period end                               10,566             11,510                   10,566              11,510
Retail square feet at period end                         1,065              1,128                    1,065               1,128


Our total revenues, which are mostly comprised of net sales, but also include
membership and other income, increased $5.8 billion or 4.3% and $12.8 billion or
3.1% for the three and nine months ended October 31, 2021, respectively, when
compared to the same periods in the previous fiscal year. The increases in
revenues were primarily due to strong positive comparable sales for the Walmart
U.S. and Sam's Club segments which benefited from strong U.S. consumer spending
and some inflation, along with positive comparable sales in the majority of our
remaining international markets. These increases were partially offset by net
sales decreases of $9.4 billion and $22.4 billion for the three and nine months
ended October 31, 2021, respectively, primarily related to the divestiture of
our operations in the U.K. and Japan, which closed in February 2021 and March
2021, respectively. Net sales also benefited from a $1.3 billion and $4.7
billion positive impact of fluctuations in currency exchange rates for the three
and nine months ended October 31, 2021, respectively.
Gross profit as a percentage of net sales ("gross profit rate") decreased 42
basis points for the three months ended October 31, 2021 when compared to the
same period in the previous fiscal year, primarily due to higher supply chain
costs and fuel mix in the Walmart U.S. and Sam's Club segments. These decreases
were partially offset by benefits in the Walmart U.S. segment related to lower
markdowns, price management, and growth in our advertising business.
Gross profit rate increased 15 basis points for the nine months ended October
31, 2021 when compared to the same period in the previous fiscal year. The
decrease for the three months ended October 31, 2021 was more than offset by
increases in the first quarter of fiscal 2022 primarily driven by mix shifts
into general merchandise in the Walmart U.S. segment, due in part to government
stimulus spending, lower markdowns and lapping last year's COVID-19 related mix
shifts into lower margin categories such as food and consumables.
Operating expenses as a percentage of net sales was relatively flat for the
three months ended October 31, 2021, which benefited from growth in net sales
and $0.2 billion of lower incremental COVID-19 related costs as compared to the
same period in the prior year, offset by increased wage investments primarily in
the Walmart U.S. segment. Operating expenses as a percentage of net sales
decreased 27 basis points for the nine months ended October 31, 2021, primarily
driven by net sales growth and lower incremental COVID-19 related costs of $2.0
billion as compared to the same period in the prior year, partially offset by
increased wage investments primarily in the Walmart U.S. segment.
Loss on extinguishment of debt was $2.4 billion for both the three and nine
months ended October 31, 2021, due to the early retirement of certain higher
rate long-term debt to reduce interest expense in future periods.
Other gains and losses for the three months ended October 31, 2021 consisted of
a net gain of $1.2 billion primarily associated with the fair value changes of
our equity investments. Other gains and losses for the nine months ended October
31, 2021 consisted of a net loss of $2.3 billion which primarily reflects $1.8
billion in net losses associated with the fair value changes of our equity
investments, as well as $0.4 billion in incremental losses associated with the
divestiture of our operations in the U.K. and Japan upon closing of the
transactions during the first quarter of fiscal 2022. For the three and nine
months ended October 31, 2020, other gains and losses consisted of a net gain of
$1.9 billion and $5.8 billion, respectively, primarily representing the fair
value changes of our equity investments and the loss on sale of Walmart
Argentina.
Our effective income tax rate was 24.5% and 25.9% for the three and nine months
ended October 31, 2021, respectively, compared to 26.9% and 25.7% for the same
periods in the previous fiscal year. The decrease in effective tax rate for the
three months ended October 31, 2021 is primarily due to the loss on sale of
Walmart Argentina recorded in the third quarter of fiscal 2021, as it provided
minimal realizable tax benefit. 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,
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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 decreased
$2.1 billion and $5.4 billion for the three and nine months ended October 31,
2021 respectively, when compared to the same periods in the previous fiscal
year. Accordingly, diluted net income per common share attributable to Walmart
was $1.11 and $3.59 for the three and nine months ended October 31, 2021,
respectively, which represents respective decreases of $0.69 and $1.89, when
compared to the same periods in the previous fiscal year.
Walmart U.S. Segment
                                                         Three Months Ended October 31,              Nine Months Ended October 31,
(Amounts in millions, except unit counts)                    2021                 2020                  2021                  2020
Net sales                                             $       96,609           $ 88,353          $      287,968           $ 270,378
Percentage change from comparable period                         9.3   %            6.2  %                  6.5   %             8.7  %
Calendar comparable sales increase                               9.4   %            6.6  %                  6.7   %             8.9  %
Operating income                                      $        4,860           $  4,589          $       16,404           $  13,948
Operating income as a percentage of net sales                    5.0   %            5.2  %                  5.7   %             5.2  %
Unit counts at period end                                      4,742              4,748                   4,742               4,748
Retail square feet at period end                                 703                703                     703                 703


Net sales for the Walmart U.S. segment increased $8.3 billion or 9.3% and $17.6
billion or 6.5% for the three and nine months ended October 31, 2021,
respectively, when compared to the same periods in the previous fiscal year. The
increases were due to comparable sales of 9.4% and 6.7% for the three and nine
months ended October 31, 2021, respectively, driven by growth in transactions
and average ticket, which includes strong consumer spending from government
stimulus and some higher inflation impacts in certain merchandise categories
compared to recent years. In the first quarter of fiscal 2022, average ticket
increased while transactions decreased as customers consolidated shopping trips
and purchased larger baskets. Transaction growth turned positive in April 2021
and continued with strong growth through the second and third quarters of fiscal
2022 as customers' pre-pandemic behaviors largely resumed. The Walmart U.S.
segment's eCommerce sales grew at a slower rate than total comparable sales
which negatively contributed approximately 0.1% to comparable sales for the
three months ended October 31, 2021 as customers shifted toward more in-store
shopping as compared to the same period in the previous year. For the nine
months ended, eCommerce sales positively contributed approximately 1.3% to
comparable sales, primarily driven by store pick-up and delivery.
Gross profit rate decreased 12 basis points for the three months ended October
31, 2021 when compared to the same period in the previous fiscal year, primarily
driven by higher supply chain costs and fuel mix, partially offset by lower
markdowns, price management, and growth in our advertising business. For the
nine months ended October 31, 2021, gross profit rate increased 50 basis points
due primarily to shifts into general merchandise due in part to government
stimulus spending and lapping last year's COVID-related mix shifts into food and
consumables in the first quarter of fiscal 2021. Gross profit rate was also
impacted by lower markdowns, lapping the temporary closures of our Auto Care
Centers and Vision centers, price management, and growth in our advertising
business, partially offset by increased supply chain costs.
Operating expenses as a percentage of net sales increased 20 basis points for
the three months ended October 31, 2021 when compared to the same period in the
previous fiscal year, primarily driven by increased wage investments, partially
offset by strong sales growth and $0.1 billion of lower incremental COVID-19
costs. Operating expenses as a percentage of net sales were relatively flat for
the nine months ended October 31, 2021 when compared to the same period in the
previous fiscal year, which benefited from strong sales, lower incremental
COVID-19 costs of $1.5 billion and lapping a $0.4 billion business restructuring
charge in the second quarter of fiscal 2021, partially offset by increased
investments in wages.
As a result of the factors discussed above, operating income increased $0.3
billion and $2.5 billion for the three and nine months ended October 31, 2021,
respectively, when compared to the same periods in the previous fiscal year.
Walmart International Segment
                                                         Three Months Ended October 31,             Nine Months Ended October 31,
(Amounts in millions, except unit counts)                    2021                 2020                  2021                 2020
Net sales                                             $       23,627           $ 29,554          $       73,962           $ 86,487
Percentage change from comparable period                       (20.1)  %            1.3  %                (14.5)  %           (0.7) %
Operating income                                      $          871           $  1,078          $        2,926           $  2,696
Operating income as a percentage of net sales                    3.7   %            3.6  %                  4.0   %            3.1  %
Unit counts at period end                                      5,224              6,163                   5,224              6,163
Retail square feet at period end                                 282                345                     282                345


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Net sales for the Walmart International segment decreased $5.9 billion or 20.1%
and $12.5 billion or 14.5% for the three and nine months ended October 31, 2021,
respectively, when compared to the same periods in the previous fiscal year. The
reduction in net sales was due to decreases of $9.4 billion and $22.4 billion
for the three and nine months ended October 31, 2021, respectively, primarily
related to the divestiture of Asda and Seiyu during the first quarter of fiscal
2022. The decreases were partially offset by positive net sales growth in the
majority of our remaining markets. Net sales for the three and nine months ended
October 31, 2021 included positive fluctuations in currency exchange rates of
$1.3 billion and $4.7 billion, respectively.
Gross profit rate decreased 86 basis points for the three months ended October
31, 2021 when compared to the same period in the previous fiscal year, primarily
driven by shifts into lower margin formats. The divested markets also negatively
impacted our gross profit rate. Gross profit rate decreased 38 basis points for
the nine months ended October 31, 2021, when compared to the same period in the
previous fiscal year primarily driven by shifts into lower margin formats and
the decrease related to our divested markets, partially offset by benefits in
the first quarter of fiscal 2022 related to mix shifts into higher margin
categories and lower markdowns.
Operating expenses as a percentage of net sales decreased 10 and 62 basis points
for the three and nine months ended October 31, 2021, respectively when compared
to the same periods in the previous fiscal year, primarily due to lower
incremental COVID-19 related costs and impacts from the divested markets.
Additionally, operating expenses as a percentage of net sales for the nine
months ended October 31, 2021 benefited from depreciation and amortization
expense not having been recorded for our operations in the U.K. and Japan
subsequent to their held for sale classification at the end of fiscal 2021 and
prior to closing during the first quarter of fiscal 2022.
Operating income for the three and nine months ended October 31, 2021 included
positive fluctuations in currency exchange rates of $0.1 billion and $0.3
billion, respectively. As a result of the factors discussed above, operating
income decreased $0.2 billion and increased $0.2 billion for the three and nine
months ended October 31, 2021, respectively, when compared to the same periods
in the previous fiscal year.
Sam's Club Segment
                                                         Three Months Ended October 31,             Nine Months Ended October 31,
(Amounts in millions, except unit counts)                    2021                 2020                  2021                 2020
Including Fuel
Net sales                                             $       18,971           $ 15,845          $       54,307           $ 47,383
Percentage change from comparable period                        19.7   %            8.3  %                 14.6   %            8.9  %
Calendar comparable sales increase                              19.6   %            8.3  %                 14.6   %            8.9  %
Operating income                                      $          475           $    431          $        1,710           $  1,517
Operating income as a percentage of net sales                    2.5   %            2.7  %                  3.1   %            3.2  %
Unit counts at period end                                        600                599                     600                599
Retail square feet at period end                                  80                 80                      80                 80

Excluding Fuel (1)
Net sales                                             $       16,614           $ 14,596          $       47,988           $ 43,929
Percentage change from comparable period                        13.8   %           11.6  %                  9.2   %           12.7  %
Operating income                                      $          368           $    358          $        1,473           $  1,283
Operating income as a percentage of net sales                    2.2   %            2.5  %                  3.1   %            2.9  %


(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 $3.1 billion or 19.7% and $6.9
billion or 14.6% for the three and nine months ended October 31, 2021,
respectively, when compared to the same periods in the previous fiscal year. The
increases were primarily due to comparable sales, including fuel, of 19.6% and
14.6% for the three and nine months ended October 31, 2021, respectively. Growth
in comparable sales benefited from growth in transactions and average ticket and
was aided by consumer spending due to government stimulus, and also includes
some higher inflation impacts in certain merchandise categories compared to
recent years. The growth in comparable sales was partially offset by our
decision to remove tobacco from certain club locations. Sam's Club eCommerce net
sales positively contributed approximately 1.1% and 1.7% to comparable sales for
the three and nine months ended October 31, 2021, respectively.
Gross profit rate decreased 127 and 75 basis points for the three and nine
months ended October 31, 2021, respectively, when compared to the same periods
in the previous fiscal year. The gross profit rates were negatively impacted by
higher supply chain costs, increased fuel sales which have lower margins, and
cost inflation. The decrease in gross profit rate for the nine months ended
October 31, 2021 was partially offset by favorable sales mix, including reduced
tobacco sales.
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Membership and other income increased 14.4% and 13.0% for the three and nine
months ended October 31, 2021, respectively, when compared to the same periods
in the previous fiscal year. The increases were due to increases in overall
renewal rates, new member sign-ups and Plus penetration.
Operating expenses as a percentage of segment net sales decreased 117 and 73
basis points for the three and nine months ended October 31, 2021, respectively,
when compared to the same periods in the previous fiscal year. The decreases
were primarily the result of higher fuel sales as well as a benefit from lower
incremental COVID-19 related costs. The decrease in operating expense as a
percentage of segment net sales for the nine months ended October 31, 2021 was
partially offset by reduced tobacco sales.
As a result of the factors discussed above, operating income increased $44
million and $193 million for the three and nine months ended October 31, 2021,
respectively, when compared to the same periods in the previous fiscal year.

Liquidity and Capital Resources
Liquidity
The strength and stability of our operations have historically supplied us with
a significant source of liquidity. Our cash flows provided by operating
activities, supplemented with our long-term debt and short-term borrowings, have
been sufficient to fund our operations while allowing us to invest in activities
that support the long-term growth of our operations. Generally, some or all of
the remaining available cash flow has been used to fund the dividends on our
common stock and share repurchases. In the current environment, we believe our
sources of liquidity will continue to be adequate to fund operations, finance
our global investment and expansion activities, pay dividends and fund our share
repurchases for the foreseeable future.
Net Cash Provided by Operating Activities
                                                                           Nine Months Ended October 31,
(Amounts in millions)                                                                                                   2021              2020
Net cash provided by operating activities                                                                            $ 16,291          $ 22,880


Net cash provided by operating activities was $16.3 billion and $22.9 billion
for the nine months ended October 31, 2021 and 2020, respectively. The decrease
in cash provided by operating activities for the nine months ended October 31,
2021 was primarily due to an increase in inventory purchases to support strong
sales and lapping the impact of accelerated inventory sell-through in fiscal
2021, as well as timing and payment of wages.
Cash Equivalents and Working Capital Deficit
Cash and cash equivalents were $16.1 billion and $14.3 billion at October 31,
2021 and 2020, respectively. Our working capital deficit was $4.7 billion as of
October 31, 2021, which decreased when compared to $14.5 billion as of
October 31, 2020, primarily driven by the increase in inventory described above.
We generally operate with a working capital deficit due to our efficient use of
cash in funding operations, consistent access to the capital markets and returns
provided to our shareholders in the form of payments of cash dividends and share
repurchases.
As of October 31, 2021 and January 31, 2021, cash and cash equivalents of $5.5
billion and $2.8 billion, respectively, may not be freely transferable to the
U.S. due to local laws or other restrictions. Of the $5.5 billion at October 31,
2021, approximately $2.8 billion can only be accessed through dividends or
intercompany financing arrangements subject to approval of the Flipkart minority
shareholders; however, this cash is expected to be utilized to fund the
operations of Flipkart.
Net Cash Used in Investing Activities
                                                        Nine Months Ended 

October 31,


   (Amounts in millions)                                                          2021          2020
   Net cash used in investing activities                                       $ (1,530)     $ (6,507)


Net cash used in investing activities was $1.5 billion as compared to $6.5
billion for the nine months ended October 31, 2021 and 2020, respectively. Net
cash used in investing activities decreased $5.0 billion for the nine months
ended October 31, 2021 primarily due to the net proceeds received from the
divestitures of Asda and Seiyu, partially offset by increased capital
expenditures.
Growth activities
For the fiscal year ending January 31, 2022, we project capital expenditures
will be approximately $13 billion, with a focus on supply chain, automation,
customer-facing initiatives and technology. Refer to the "  Strat    e    gic
Capital Allocation  " section in our   Company Pe    rformance Metrics   for
capital expenditure detail for the nine months ended October 31, 2021 and 2020.
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Net Cash Used in Financing Activities
                                                       Nine Months Ended 

October 31,


  (Amounts in millions)                                                         2021           2020
  Net cash used in financing activities                                     

$ (18,113) $ (11,340)




Net cash from financing activities generally consists of transactions related to
our short-term and long-term debt, dividends paid and the repurchase of the
Company's common stock. Transactions with noncontrolling interest shareholders
are also classified as cash flows from financing activities. Net cash used in
financing activities was $18.1 billion as compared to $11.3 billion for the nine
months ended October 31, 2021 and 2020, respectively. The increase in net cash
used in financing activities is primarily due to repayments of long-term debt
and related payment of premiums for the early extinguishment of certain notes,
as well as increased share repurchases, partially offset by new long-term debt
issuances in the current year and equity funding from the sale of subsidiary
stock. During the nine months ended October 31, 2021, the Company received $3.2
billion related to the sale of stock by certain of its subsidiaries, primarily
related to a new equity funding which reduced the Company's ownership of its
majority-owned Flipkart subsidiary from approximately 83% as of January 31,
2021, to approximately 75%.
In April 2021, the Company renewed and extended its existing 364-day revolving
credit facility of $10.0 billion as well as its five-year credit facility of
$5.0 billion. In total, we had committed lines of credit in the U.S. of $15.0
billion at October 31, 2021, all undrawn.
Long-term Debt
The following table provides the changes in our long-term debt for the nine
months ended October 31, 2021:
                                                           Long-term debt
                                                           due within one
(Amounts in millions)                                           year                Long-term debt             Total
Balances as of February 1, 2021                           $        3,115          $        41,194          $   44,309
Proceeds from issuance of long-term debt                               -                    6,945               6,945
Repayments of long-term debt                                      (3,010)                 (10,000)            (13,010)
Reclassifications of long-term debt                                1,461                   (1,461)                  -
Other                                                                  9                     (253)               (244)
Balances as of October 31, 2021                           $        1,575

$ 36,425 $ 38,000




Our total outstanding long-term debt decreased $6.3 billion during the nine
months ended October 31, 2021, primarily due to the extinguishment and
maturities of certain long-term debt, partially offset by the issuance of new
long-term debt in September 2021. Refer to   Note 4   to our Condensed
Consolidated Financial Statements for details on the maturities, extinguishment
and issuances of long-term debt. The early extinguishment of certain long-term
debt allowed us to retire higher rate debt to reduce interest expense in future
periods. In connection with this early extinguishment of debt, the Company paid
premiums of $2.3 billion, which represents the majority of the $2.4 billion loss
recorded on the transaction during the nine months ended October 31, 2021.
Dividends
Effective February 18, 2021, the Board of Directors approved the fiscal 2022
annual dividend of $2.20 per share, an increase over the fiscal 2021 annual
dividend of $2.16 per share. For fiscal 2022, the annual dividend was or will be
paid in four quarterly installments of $0.55 per share, according to the
following record and payable dates:
Record Date             Payable Date
March 19, 2021          April 5, 2021
May 7, 2021             June 1, 2021
August 13, 2021         September 7, 2021
December 10, 2021       January 3, 2022


The dividend installments payable on April 5, 2021, June 1, 2021 and
September 7, 2021 were paid as scheduled.
Company Share Repurchase Program
From time to time, the Company repurchases shares of its common stock under
share repurchase programs authorized by the Company's Board of Directors. All
repurchases made prior to February 22, 2021 were made under the plan in effect
at the beginning of fiscal 2022. On February 18, 2021, the Board of Directors
approved a new $20.0 billion share repurchase program which has no expiration
date or other restrictions limiting the period over which the Company can make
repurchases, and beginning February 22, 2021, replaced the previous share
repurchase program. As of October 31, 2021, authorization for $13.1 billion of
share repurchases remained under the share repurchase program. Any repurchased
shares are constructively retired and returned to an unissued status.
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We regularly review share repurchase activity and consider several factors in
determining when to execute share repurchases, including, among other things,
current cash needs, capacity for leverage, cost of borrowings, our results of
operations and the market price of our common stock. We anticipate that a
majority of the ongoing share repurchase program will be funded through the
Company's free cash flow. The following table provides, on a settlement date
basis, share repurchase information for the nine months ended October 31, 2021
and 2020:
                                                                         Nine Months Ended October 31,
(Amounts in millions, except per share data)                                                                    2021                 2020
Total number of shares repurchased                                                                               52.7                  9.6
Average price paid per share                                                                                 $ 139.76             $ 123.54
Total amount paid for share repurchases                                                                      $  7,368             $  1,186


Capital Resources
We believe cash flows from operations, our current cash position and access to
capital markets will continue to be sufficient to meet our anticipated operating
cash needs, which include funding seasonal increases in merchandise inventories,
our capital expenditures, acquisitions, dividend payments and share repurchases.
We have strong commercial paper and long-term debt ratings that have enabled and
should continue to enable us to refinance our debt as it becomes due at
favorable rates in the capital markets. We also have $15.0 billion in various
committed lines of credit in the U.S., all of which currently remains undrawn.
At October 31, 2021, the ratings assigned to our commercial paper and rated
series of our outstanding long-term debt were as follows:
         Rating agency                      Commercial paper        

Long-term debt


         Standard & Poor's                        A-1+                    AA
         Moody's Investors Service                P-1                     Aa2
         Fitch Ratings                            F1+                     AA


Credit rating agencies review their ratings periodically and, therefore, the
credit ratings assigned to us by each agency may be subject to revision at any
time. Accordingly, we are not able to predict whether our current credit ratings
will remain consistent over time. Factors that could affect our credit ratings
include changes in our operating performance, the general economic environment,
conditions in the retail industry, our financial position, including our total
debt and capitalization, and changes in our business strategy. Any downgrade of
our credit ratings by a credit rating agency could increase our future borrowing
costs or impair our ability to access capital and credit markets on terms
commercially acceptable to us. In addition, any downgrade of our current
short-term credit ratings could impair our ability to access the commercial
paper markets with the same flexibility that we have experienced historically,
potentially requiring us to rely more heavily on more expensive types of debt
financing. The credit rating agency ratings are not recommendations to buy, sell
or hold our commercial paper or debt securities. Each rating may be subject to
revision or withdrawal at any time by the assigning rating organization and
should be evaluated independently of any other rating. Moreover, each credit
rating is specific to the security to which it applies.
Other Matters
In   Note 7   to our Condensed Consolidated Financial Statements, which is
captioned "Contingencies" and appears in Part I of this Quarterly Report on Form
10-Q under the caption "  Item 1. Financial Statements  ," we discuss, under the
sub-caption "Opioids Litigation ," the Prescription Opiate Litigation and other
matters, including certain risks arising therefrom. In that   Note 7  , we also
discuss, under the sub-caption "Asda Equal Value Claims," the Company's
indemnification obligation for the Asda Equal Value Claims matter. We discuss
various legal proceedings related to the Federal and State Prescription Opiate
Litigation, DOJ Opioid Civil Litigation and Opioids Related Securities Class
Actions and Derivative Litigation in   Part II   of this Quarterly Report on
Form 10-Q under the caption "  Item 1. Legal Proceedings  ," under the
sub-caption "I. Supplemental Information." We also discuss items related to the
Asda Equal Value Claims matter, the Money Transfer Agent Services Proceedings
matter and the Foreign Direct Investment matters in   Part II   of this
Quarterly Report on Form 10-Q under the caption "  Item 1. Legal Proceedings  ,"
under the sub-caption "II. Certain Other Matters." We also discuss an
environmental matter with the State of California in   Part II   of this
Quarterly Report on Form 10-Q under the caption "  Item 1. Legal Proceedings  ,"
under the sub-caption "III. Environmental Matters."The foregoing matters and
other matters described elsewhere in this Quarterly Report on Form 10-Q
represent contingent liabilities of the Company that may or may not result in
the incurrence of a material liability by the Company upon their final
resolution.
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