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Item 2. Management’s Discussion and Analysis

2025-08-29 compared with 2025-06-06 · 125 added, 112 removed, 286 unchanged (45% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion, which presents Walmart Inc.'s ("Walmart," the "Company," "our," "us" or "we") results for periods occurring in the fiscal year ending January 31, 2026 ("fiscal 2026") and the fiscal year ended January 31, 2025 ("fiscal 2025"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three months ended April 30, 2025, 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, 2025, 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, 2025.

This discussion, which presents Walmart Inc.'s ("Walmart," the "Company," "our," "us" or "we") results for periods occurring in the fiscal year ending January 31, 2026 ("fiscal 2026") and the fiscal year ended January 31, 2025 ("fiscal 2025"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three and six months ended July 31, 2025, 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, 2025, 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, 2025.

Recent Developments, Macroeconomic Conditions and Potential Impacts

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and supply chain pressures, any of which may impact our results.

While we operate in a highly dynamic tariff environment, less than one third of what we sell in the U.S.

is imported, with most of our imports coming from China, Mexico, Vietnam, India and Canada.

We are committed to helping customers save money and live better through everyday low prices, supported by everyday low costs.

Our operating results are influenced in part by our sourcing, pricing, merchandising, inventory management and other strategies in response to cost increases, which are further discussed in our Annual Report on Form 10-K.

Information on certain risks, factors, and uncertainties that can affect our operating results and an investment in our securities can be found herein under " Item 1A.

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Other Information ."

In July 2025, the One Big Beautiful Bill Act (the "Tax Act") was enacted, introducing a series of corporate tax changes in the U.S., including 100% bonus depreciation on qualified property and full expensing for research and development expenditures.

The impacts of the Tax Act are reflected in our results for the fiscal quarter ended July 31, 2025, and there was no material impact to our income tax expense or effective tax rate.

We expect certain provisions will decrease cash taxes paid in the current fiscal year and may change the timing of cash tax payments in future periods.

For a detailed discussion on results of operations by reportable segment, refer to " Results of Operations " below.

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retail market where there is a single currency, one inflationary market and generally consistent store and club formats from year to year.

Calendar comparable sales, as well as the impact of fuel, for the three months ended April 30, 2025 and 2024, were as follows:

Three Months Ended April 30,

Calendar comparable sales, as well as the impact of fuel, for the three and six months ended July 31, 2025 and 2024, were as follows:

Three Months Ended July 31, Six Months Ended July 31,

2025 2024 2025 2024 2025 2024 2025 2024

With Fuel Fuel Impact

With Fuel Fuel Impact With Fuel Fuel Impact

4.7 % 4.2 % (0.1) % 0.0 % 3.9 % 4.6 % (0.1) % 0.1 %

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4.4 % 4.3 % (0.5) % (0.1) % 3.8 % 4.6 % (0.4) % (0.1) %

Comparable sales in the U.S., including fuel, increased 3.0% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Comparable sales in the U.S., including fuel, increased 4.4% and 3.8% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The Walmart U.S.

segment had comparable sales growth of 3.1% for the three months ended April 30, 2025 driven by growth in transactions and unit volumes, with strong sales in health and wellness and grocery.

segment had comparable sales growth of 4.7% and for 3.9% the three and six months ended July 31, 2025, respectively, driven by growth in average ticket and transactions, reflecting strength in all merchandise categories.

The Walmart U.S.

segment's eCommerce net sales positively contributed approximately 3.4% to comparable sales, which outpaced the total segment growth for the three months ended April 30, 2025.

segment's eCommerce net sales positively contributed approximately 4.0% and 3.7% to comparable sales for the three and six months ended July 31, 2025, respectively.

This growth reflects continued strength in customer and Walmart+ member engagement with omnichannel offerings, which was primarily driven by store-fulfilled pickup and delivery.

Comparable sales in the Sam's Club U.S.

segment increased 2.8% for the three months ended April 30, 2025, driven by growth in club and digital transactions as well as unit volumes, including strong sales in grocery and health and wellness.

segment increased 3.3% and 3.1% for the three and six months ended July 31, 2025, respectively, driven by growth in unit volumes with strength in transactions, reflecting strong sales in grocery, health and wellness, and general merchandise.

The Sam's Club U.S.

segment's eCommerce sales positively contributed approximately 3.3% to comparable sales for the three months ended April 30, 2025, which outpaced the total segment growth as a result of lower fuel sales.

segment's eCommerce net sales positively contributed approximately 3.4% to comparable sales for both the three and six months ended July 31, 2025, which outpaced the total segment growth as a result of lower fuel sales.

This growth reflects continued strength in member engagement with omnichannel offerings.

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Our objective is to achieve operating income leverage, which we define as growing operating income at a faster rate than net sales.

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

(Amounts in millions) 2025 2024 2025 2024

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Operating expenses 21.2 % 20.6 % 21.1 % 20.7 %

20.8 % 20.8 %

Operating income 4.1 % 4.7 % 4.2 % 4.5 %

(1) Gross profit defined as net sales less cost of sales.

Gross profit as a percentage of net sales ("gross profit rate") increased 12 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to the Walmart U.S.

segment driven by disciplined inventory management, including lower levels of markdowns, and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Additionally, the increase was partially offset by ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 6 basis points for the three months ended April 30, 2025 when compared to the same period in the previous fiscal year.

The increase was primarily due to increased depreciation and amortization and casualty claims expense in the U.S., partially offset by the lapping of business restructuring charges incurred in the previous fiscal year.

Operating income as a percentage of net sales increased 7 basis points for the three months ended April 30, 2025, primarily due to the factors described above.

Gross profit as a percentage of net sales ("gross profit rate") increased 4 and 8 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to the Walmart U.S.

segment, driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Additionally, the increases were partially offset by ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 64 and 35 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year, which reflect charges of $0.4 billion related to certain legal matters.

The increases for the three and six months ended July 31, 2025 were also impacted by higher self-insured general liability claims expense in the U.S.

of approximately $0.4 billion and $0.6 billion, respectively, influenced by rising costs to resolve claims across retail and related industries.

Operating income as a percentage of net sales decreased 58 and 27 basis points for the three and six months ended July 31, 2025, respectively, primarily due to the factors described above.

As we execute our financial framework, we believe our return on capital will improve over time.

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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 Ended April 30,

For the Trailing Twelve Months Ended July 31,

(Amounts in millions) 2025 2024

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Return on investment (ROI) 15.1 % 15.1 %

(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 two.

As of April 30,

(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 previous period and dividing by two.

As of July 31,

(Amounts in millions)

2025 2024 2023

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Accrued liabilities 28,821 27,656 29,239

ROA was 7.5% and 7.9% for the trailing 12 months ended April 30, 2025 and 2024, respectively.

The decrease in ROA was primarily due to an increase in average total assets, resulting from higher purchases of property and equipment, as well as a slight decline in net income during the trailing 12 month period.

The decline in net income was the result of net decreases in the fair value of our equity and other investments, partially offset by higher operating income.

ROI was 15.3% and 15.0% for the trailing 12 months ended April 30, 2025 and 2024, respectively.

The increase in ROI was the result of an increase in operating income, primarily due to improvements in business performance and lapping business reorganization charges incurred in the comparative trailing 12 months, partially offset by an increase in average invested capital primarily due to higher purchases of property and equipment.

ROA was 8.3% and 6.4% for the trailing 12 months ended July 31, 2025 and 2024, respectively.

The increase in ROA was primarily due to an increase in net income as a result of net increases in the fair value of our equity and other investments combined with higher operating income, offset by an increase in average total assets due to higher purchases of property and equipment.

ROI was flat at 15.1% for the trailing 12 months ended July 31, 2025 and 2024 as a result of increased operating income, primarily due to improvements in business performance, offset by an increase in average invested capital due to higher purchases of property and equipment.

Capital Allocation

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The following table provides additional detail regarding our capital expenditures:

(Amounts in millions) Three Months Ended April 30,

(Amounts in millions) Six Months Ended July 31,

Allocation of Capital Expenditures 2025 2024

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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 provided by or used in financing activities.

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.

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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 provided by or used in financing activities.

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2025 2024

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$ (11,199) $ (10,128)

Net cash provided by (used in) financing activities

Net cash used in financing activities (6,993) (6,945)

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

Net cash provided by operating activities was $5.4 billion for the three months ended April 30, 2025, which represents an increase of $1.2 billion when compared to the same period in the prior year.

The increase was primarily due to an increase in cash provided by operating income and timing of certain payments.

Free cash flow for the three months ended April 30, 2025 was $0.4 billion, which represents an increase of $0.9 billion when compared to the same period in the prior year.

Net cash provided by operating activities was $18.4 billion for the six months ended July 31, 2025, which represents an increase of $2.0 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to timing of certain payments, lower cash tax payments and increased cash provided by operating income.

Free cash flow for the six months ended July 31, 2025 was $6.9 billion, which represents an increase of $1.1 billion when compared to the same period in the previous fiscal year.

The increase in free cash flow was due to the increase in net cash provided by operating activities described above, partially offset by an increase of $0.9 billion in capital expenditures to support our investment strategy.

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Consolidated Results of Operations

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

(Dollar amounts and retail square feet in millions) 2025 2024 2025 2024

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Percentage change from comparable period 4.8 % 4.7 % 3.7 % 5.3 %

Membership & other income (1)

Membership and other income (1)

1,652 1,568 3,280 3,138

Total revenues 177,402 169,335 343,011 330,843

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Retail square feet at period end

(1) Membership and other income includes membership fees and other items such as rental and tenant income, recycling income, gift card breakage income, as well as other income from corporate campus facilities.

1,052 1,049 1,052 1,049

(1) Membership and other income includes membership fees and other items such as rental and tenant income, recycling income and gift card breakage income, as well as other income from corporate campus facilities.

(2) Gross profit is defined as net sales less cost of sales.

Operating expenses refers to operating, selling, general and administrative expenses.

Our total revenues increased $4.1 billion or 2.5% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to strong positive comparable sales in our U.S.

segments and international markets driven by growth in transactions and unit volumes, with strength in eCommerce as well as strong sales in grocery and health and wellness.

Net sales for the three months ended April 30, 2025 were negatively affected by $2.4 billion in currency exchange rate fluctuations.

Additionally, net sales growth was also impacted by approximately 1% due to one extra day in February 2024 as a result of a leap year.

Membership and other income increased $0.1 billion or 3.7% for the three months ended April 30, 2025, primarily due to strong growth in membership fee income globally, partially offset by decreases in other income items.

Gross profit rate increased 12 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to the Walmart U.S.

Additionally, the increase was partially offset by ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 6 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Our total revenues increased $8.1 billion or 4.8% and $12.2 billion or 3.7% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to strong positive comparable sales in our U.S.

segments and international markets driven by growth in average ticket and transactions, with strength in eCommerce.

Net sales growth across channels also reflected strong sales in grocery and health and wellness in our U.S.

Net sales for the three and six months ended July 31, 2025 were negatively affected by $1.5 billion and $3.9 billion, respectively, in currency exchange rate fluctuations.

Membership and other income increased $0.1 billion or 5.4% and $0.1 billion or 4.5% for the three and six months ended July 31, 2025, respectively, primarily due to strong growth in membership fee income globally, partially offset by decreases in other income items.

Gross profit rate increased 4 and 8 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to the Walmart U.S.

segment, driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Additionally, the increases were partially offset by ongoing channel and format mix shifts in the Walmart International segment.

The increases for the three and six months ended July 31, 2025 were also impacted by higher self-insured general liability claims expense in the U.S.

of approximately $0.4 billion and $0.6 billion, respectively, influenced by rising costs to resolve claims across retail and related industries.

Other gains and losses consist of certain non-operating items, such as the change in the fair value of our investments and gains or losses on business dispositions, which by their nature can fluctuate from period to period.

Other gains and losses for the three months ended April 30, 2025 and 2024 consisted of net losses of $0.6 billion and net gains of $0.8 billion, respectively, which primarily consisted of changes in fair value of our equity and other investments driven by changes in their underlying stock prices.

Our effective income tax rate was 22.6% for the three months ended April 30, 2025, compared to 24.6% for the same period in the previous fiscal year.

Other gains and losses for the three and six months ended July 31, 2025 consisted of net gains of $2.7 billion and $2.1 billion, respectively, compared to net losses of $1.2 billion and $0.4 billion for the same periods in the previous fiscal year.

These net gains and losses primarily consisted of changes in fair value of our equity and other investments driven by changes in their underlying stock prices.

Our effective income tax rate was 23.3% and 23.0% for the three and six months ended July 31, 2025, respectively, compared to 24.2% and 24.4% for the same periods in the previous fiscal year.

The decrease in effective tax rate is primarily due to the tax impact on changes in fair value of our investments.

Our effective income tax rate may fluctuate as a result of various factors, including changes in our assessment of unrecognized tax benefits, valuation allowances, business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, changes in tax law, changes in the administrative practices, principles, and interpretations related to tax, and the mix and size of earnings among our U.S.

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statutory rate.

As a result of the factors discussed above, consolidated net income decreased $0.7 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Accordingly, diluted net income per common share attributable to Walmart was $0.56 for the three months ended April 30, 2025, which represents a decrease of $0.07 when compared to the same period in the previous fiscal year.

Three Months Ended April 30,

As a result of the factors discussed above, consolidated net income increased $2.4 billion and $1.8 billion for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

Accordingly, diluted net income per common share attributable to Walmart was $0.88 and $1.43 for the three and six months ended July 31, 2025, respectively, which represents an increase of $0.32 and $0.24 when compared to the same periods in the previous fiscal year.

Three Months Ended July 31, Six Months Ended July 31,

(Dollar amounts and retail square feet in millions) 2025 2024 2025 2024

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Calendar comparable sales increase 4.7 % 4.2 % 3.9 % 4.6 %

Membership & other income 636 613

Membership and other income

649 604 1,285 1,217

Gross profit 33,674 31,827 64,485 61,402

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Net sales for the Walmart U.S.

segment increased $3.5 billion or 3.2% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was due to comparable sales of 3.1% for the three months ended April 30, 2025, driven by growth in transactions and unit volumes, with strong sales in health and wellness and grocery.

segment increased $5.6 billion or 4.8% and $9.1 billion or 4.0% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were due to comparable sales of 4.7% and 3.9% for the three and six months ended July 31, 2025, driven by growth in average ticket and transactions, reflecting strength in all merchandise categories.

The Walmart U.S.

segment's eCommerce sales positively contributed approximately 3.4% to comparable sales, which outpaced the total segment growth for the three months ended April 30, 2025.

segment's eCommerce net sales positively contributed approximately 4.0% and 3.7% to comparable sales for the three and six months ended July 31, 2025, respectively.

This growth reflects continued strength in customer and Walmart+ member engagement with omnichannel offerings, which was primarily driven by store-fulfilled pickup and delivery.

Membership and other income increased 3.8% for three months ended April 30, 2025, primarily driven by double-digit percentage growth in membership fee income from Walmart+.

Gross profit rate increased 25 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily driven by disciplined inventory management, including lower levels of markdowns, and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 8 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to increased depreciation and amortization, casualty claims expense, as well as VIZIO operating costs following the acquisition in December 2024, partially offset by the lapping of business restructuring charges incurred in the previous fiscal year.

As a result of the factors discussed above, operating income increased $0.4 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Membership and other income increased 7.5% and 5.6% for the three and six months ended July 31, 2025, respectively, primarily driven by double-digit percentage growth in membership fee income from Walmart+.

Gross profit rate increased 26 basis points for both the three and six months ended July 31, 2025, when compared to the same periods in the previous fiscal year.

The increases were primarily driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

Operating expenses as a percentage of net sales increased 43 and 26 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to higher self-insured general liability claims expense, increased depreciation expense related to our continued capital investments, as well as VIZIO operating costs following the acquisition in December 2024.

As a result of the factors discussed above, operating income increased $0.1 billion and $0.5 billion for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

(Dollar amounts and retail square feet in millions) 2025 2024 2025 2024

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Retail square feet at period end 274 271 274 271

Net sales for the Walmart International segment decreased $0.1 billion or 0.3% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The decrease was primarily due to negative fluctuations in currency exchange rates of $2.4 billion, partially offset by positive comparable sales across our international markets.

Gross profit rate decreased 66 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The decrease was primarily driven by ongoing channel and format mix shifts, partially offset by ongoing business mix changes.

Operating expenses as a percentage of net sales increased 22 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to strategic growth investments, including investments in associate wages in our Mexico and Central America and Canada markets, partially offset by format mix shifts primarily in China.

As a result of the factors discussed above, operating income decreased $0.3 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Net sales for the Walmart International segment increased $1.6 billion or 5.5% and $1.6 billion or 2.6% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to positive comparable sales across our international markets, including strength in eCommerce, partially offset by negative fluctuations in currency exchange rates of $1.5 billion and $3.9 billion for the three and six months ended July 31, 2025, respectively.

Gross profit rate decreased 80 and 73 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The decreases were primarily driven by ongoing channel and format mix shifts, as well as strategic growth investments in price and delivery capabilities, partially offset by growth in higher margin businesses.

Operating expenses as a percentage of net sales decreased 17 basis points and was flat for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year, primarily due to strong sales as well as format mix shifts, partially offset by strategic growth investments, including investments in associate wages in our Mexico and Central America and Canada markets.

As a result of the factors discussed above, operating income decreased $0.1 billion and $0.4 billion for the three and six months ended July 31, 2025, when compared to the same periods in the previous fiscal year.

Sam's Club U.S.

Three Months Ended April 30,

Three Months Ended July 31, Six Months Ended July 31,

(Dollar amounts and retail square feet in millions) 2025 2024 2025 2024

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Net sales for the Sam's Club U.S.

segment increased $0.6 billion or 2.9% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was primarily due to comparable sales, including fuel, of 2.8% for the three months ended April 30, 2025, driven by growth in club and digital transactions as well as unit volumes, including strong sales in grocery and health and wellness.

segment increased $0.8 billion or 3.4% and $1.4 billion or 3.2% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to comparable sales, including fuel, of 3.3% and 3.1% for the three and six months ended July 31, 2025, respectively, driven by growth in unit volumes with strength in transactions, reflecting strong sales in grocery, health and wellness, and general merchandise.

Sam's Club U.S.

eCommerce sales positively contributed approximately 3.3% to comparable sales for the three months ended April 30, 2025, which outpaced the total segment growth as a result of lower fuel sales.

eCommerce net sales positively contributed approximately 3.4% to comparable sales for both the three and six months ended July 31, 2025, which outpaced the total segment comparable sales as a result of lower fuel sales driven by lower fuel prices.

This growth reflects continued strength in member engagement with omnichannel offerings.

Membership and other income increased 8.2% for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase was due to growth in the membership base and Plus penetration.

Gross profit rate increased 36 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase for the three months ended April 30, 2025 was primarily due to improved margins in fuel.

Operating expenses as a percentage of net sales increased 25 basis points for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year, primarily due to lower fuel sales combined with continued technology and associate wage investments.

As a result of the factors discussed above, operating income increased $0.1 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

Membership and other income increased 6.6% and 7.4% for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were due to growth in the membership base and Plus penetration.

Gross profit rate decreased 11 basis points and increased 12 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The decrease for the three months ended July 31, 2025 was primarily due to the impact of reorganization charges related to strategic supply chain decisions of $0.1 billion, as well as channel mix changes partially offset by lower markdowns and operational efficiencies.

The increase for the six months ended July 31, 2025 was primarily due to lower markdowns and operational efficiencies and higher margins in fuel, partially offset by channel mix changes as well as the impact of reorganization charges described above.

Operating expenses as a percentage of net sales increased 44 and 35 basis points for the three and six months ended July 31, 2025, respectively, when compared to the same periods in the previous fiscal year, primarily due to lower fuel sales combined with increased self-insured general liability claims expense, as well as continued technology and associate wage investments.

As a result of the factors discussed above, operating income decreased $0.1 billion for the three months ended July 31, 2025 and decreased slightly for the six months ended July 31, 2025, when compared to the same periods in the previous fiscal year.

Liquidity and Capital Resources

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Net Cash Provided by Operating Activities

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2025 2024

Net cash provided by operating activities $ 18,352 $ 16,357

Net cash provided by operating activities was $5.4 billion as compared to $4.2 billion for the three months ended April 30, 2025 and 2024, respectively.

The increase was primarily due to an increase in cash provided by operating income and timing of certain payments.

Net cash provided by operating activities for the six months ended July 31, 2025 increased $2.0 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to timing of certain payments, lower cash tax payments and increased cash provided by operating income.

Cash Equivalents and Working Capital Deficit

Cash and cash equivalents were $9.3 billion and $9.4 billion at April 30, 2025 and 2024, respectively.

Our working capital deficit was $22.7 billion as of April 30, 2025, which increased when compared to the $18.9 billion working capital deficit as of April 30, 2024.

The increase in our working capital deficit was primarily driven by the timing of certain payments combined with an increase in long-term debt due within one year, partially offset by an increase in inventories related to sales growth.

Cash and cash equivalents were $9.4 billion and $8.8 billion at July 31, 2025 and 2024, respectively.

Our working capital deficit was $21.5 billion as of July 31, 2025, which increased when compared to the $18.8 billion working capital deficit as of July 31, 2024.

The increase in our working capital deficit was primarily driven by the timing of certain payments described above and an increase in long-term debt due within one year, partially offset by an increase in inventories and receivables primarily related to sales growth.

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 cash dividends and share repurchases.

As of April 30, 2025 and January 31, 2025, cash and cash equivalents of $3.7 billion and $3.3 billion, respectively, may not be freely transferable to the U.S.

As of July 31, 2025 and January 31, 2025, cash and cash equivalents of $4.0 billion and $3.3 billion, respectively, may not be freely transferable to the U.S.

due to local laws or other restrictions or are subject to the approval of the noncontrolling interest shareholders.

Net Cash Used in Investing Activities

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2025 2024

Net cash used in investing activities $ (11,199) $ (10,128)

Net cash used in investing activities was $5.1 billion as compared to $4.4 billion for the three months ended April 30, 2025 and 2024, respectively.

The increase of $0.7 billion for the three months ended April 30, 2025 is primarily due to an increase in payments for property and equipment and the change in other investing activities related to certain short-term investments.

Net Cash Provided by (Used in) Financing Activities

Three Months Ended April 30,

Net cash used in investing activities for the six months ended July 31, 2025 increased $1.1 billion when compared to the same period in the previous fiscal year.

The increase is primarily due to increased payments for property and equipment and the change in other investing activities related to certain short-term investments, partially offset by net proceeds received from sales of certain strategic investments.

Net Cash Used in Financing Activities

Six Months Ended July 31,

(Amounts in millions) 2025 2024

Net cash provided by (used in) financing activities $ 8 $ (321)

Net cash from financing activities generally consists of debt transactions, dividends paid, repurchases of Company stock and transactions with noncontrolling interest shareholders.

Net cash provided by financing activities increased $0.3 billion for the three months ended April 30, 2025, when compared to the same period in the previous fiscal year.

The increase is primarily due to new long-term debt issued in the current fiscal year as well as lapping debt repayments made in the previous fiscal year, partially offset by increased share repurchases and lower short-term borrowings in the current year.

Net cash used in financing activities $ (6,993) $ (6,945)

Net cash used in financing activities increased slightly for the six months ended July 31, 2025, when compared to the same period in the previous fiscal year.

The increase is primarily due to increased share repurchases, lower short-term borrowings in the current fiscal year and higher dividends paid, primarily offset by new long-term debt issued in the current fiscal year as well as lower debt repayments.

In April 2025, 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 April 30, 2025, all undrawn.

of $15.0 billion at July 31, 2025, all undrawn.

Long-term Debt

The following table provides the changes in our long-term debt for the three months ended April 30, 2025:

The following table provides the changes in our long-term debt for the six months ended July 31, 2025:

(Amounts in millions) Long-term debt due within one year Long-term debt Total

2 unchanged sentences

— 3,983 3,983

Repayments of long-term debt (875) — (875)

Reclassifications of long-term debt 2,286 (2,286) —

Currency and other adjustments

Balances as of April 30, 2025 $ 4,085 $ 36,520 $ 40,605

Balances as of July 31, 2025 $ 4,011 $ 35,640 $ 39,651

(1) Proceeds from issuance of long-term debt are net of deferred loan costs and any related discount or premium.

During the three months ended April 30, 2025, our total outstanding long-term debt increased $4.6 billion primarily due to the issuance of new long-term debt in April 2025.

During the six months ended July 31, 2025, our total outstanding long-term debt increased $3.7 billion, primarily due to the issuance of new long-term debt in April 2025.

Refer to Note 4 to our Condensed Consolidated Financial Statements for details.

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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 during the three months ended April 30, 2025 were made under the current $20 billion share repurchase program approved in November 2022, which has no expiration date or other restrictions limiting the period over which the Company can make repurchases.

As of April 30, 2025, authorization for $7.5 billion of share repurchases remained under the share repurchase program.

All repurchases made during the six months ended July 31, 2025 were made under the current $20 billion share repurchase program approved in November 2022, which has no expiration date or other restrictions limiting the period over which the Company can make repurchases.

As of July 31, 2025, authorization for $5.9 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 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 three months ended April 30, 2025 and 2024:

Three Months Ended April 30,

The following table provides, on a settlement date basis, share repurchase information for the six months ended July 31, 2025 and 2024:

Six Months Ended July 31,

(Amounts in millions, except per share data) 2025 2024

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Total amount paid for share repurchases $ 6,200 $ 2,072

During the three months ended April 30, 2025, the Company repurchased $4.6 billion in shares of its common stock, an increase of $3.5 billion as compared to the same period in the previous fiscal year.

The increase was driven by opportunistic prices during the quarter as part of the Company's long-term strategy.

During the six months ended July 31, 2025, the Company repurchased $6.2 billion in shares of its common stock, an increase of $4.1 billion as compared to the same period in the previous fiscal year.

The increase was primarily driven by opportunistic prices during the first quarter of fiscal 2026 as part of the Company's long-term strategy.

Material Cash Requirements

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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 capital markets.

As of April 30, 2025, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

As of July 31, 2025, 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

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In Note 6 , we discuss, " Asda Equal Value Claims " the Company's indemnification obligation for the Asda Equal Value Claims matter, " Money Transfer Agent Services Matters, " a United States Federal Trade Commission complaint related to money transfers and the Company's anti-fraud program and a government investigation by the U.S.

Attorney's Office for the Middle District of Pennsylvania into the Company's consumer fraud prevention and anti-money laundering compliance related to the Company's money transfer agent services, as well as matters related to independent contractor drivers on our Spark platform under "Driver Platform Matters." In Note 6 , under " Mexico Antitrust Matter ," we also discuss a quasi-judicial administrative process initiated by COFECE against Walmex and Walmex's related constitutional challenge.

" In Note 6 , under " Mexico Antitrust Matter ," we also discuss a quasi-judicial administrative process initiated by COFECE against Walmex and Walmex's related constitutional challenge.

In Note 6 we also discuss a show cause notice and requests issued by the Directorate of Enforcement to Flipkart regarding Foreign Direct Investment rules and regulations in India and an India Antitrust Matter.

2 unchanged sentences

Money Transfer Agent Services Litigation;

Driver Platform Matter;

Driver Platform Matters;

Mexico Antitrust Matter;

1 unchanged sentence

Legal Proceedings ," under the caption "I.

Supplemental Information." We also discuss an environmental matter with the State of California and an environmental matter with the U.S.

Supplemental Information." We also discuss an environmental matter with the U.S.

Environmental Protection Agency in Part II of this Quarterly Report on Form 10-Q under the caption " Item 1.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis