What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-12-03 compared with 2025-08-29 · 97 added, 92 removed, 319 unchanged (37% 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 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.

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 nine months ended October 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

13 unchanged sentences

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.

The impacts of the Tax Act were not material 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.

17 unchanged sentences

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 and six months ended July 31, 2025 and 2024, were as follows:

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

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

Three Months Ended October 31, Nine Months Ended October 31,

2025 2024 2025 2024 2025 2024 2025 2024

4 unchanged sentences

4.5 % 4.9 % (0.2) % (0.7) % 4.0 % 4.7 % (0.4) % (0.3) %

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.

Comparable sales in the U.S., including fuel, increased 4.5% and 4.0% for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The Walmart U.S.

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.

segment had comparable sales growth of 4.8% and 4.2% for the three and nine months ended October 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 4.0% and 3.7% to comparable sales for the three and six months ended July 31, 2025, respectively.

segment's eCommerce net sales positively contributed approximately 4.4% and 3.9% to comparable sales for the three and nine months ended October 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 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.

segment increased 2.8% and 3.0% for the three and nine months ended October 31, 2025, respectively, with growth in unit volumes and transactions, reflecting strong sales in grocery, general merchandise and health and wellness.

The Sam's Club U.S.

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.

segment's eCommerce net sales positively contributed approximately 3.0% and 3.3% to comparable sales for the three and nine months ended October 31, 2025, respectively, which outpaced the total segment growth as a result of lower fuel sales driven by lower fuel prices.

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

4 unchanged sentences

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 July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

(Amounts in millions) 2025 2024 2025 2024

9 unchanged sentences

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

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.

Gross profit as a percentage of net sales ("gross profit rate") increased 2 and 6 basis points for the three and nine months ended October 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.

segment, driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories and the timing of Flipkart's The Big Billion Days ("BBD") sales event in the Walmart International segment, which primarily occurred in the fourth quarter of fiscal 2025 but mostly shifted to the third quarter of fiscal 2026.

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.

Operating expenses as a percentage of net sales increased 28 and 33 basis points for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year, primarily driven by a charge of $0.7 billion related to modification of certain share-based compensation arrangements for our PhonePe subsidiary.

The increase for the nine months ended October 31, 2025 was also impacted by higher self-insured general liability claims expense in the U.S.

of approximately $0.8 billion, influenced by rising costs to resolve claims across retail and related industries.

Operating income as a percentage of net sales decreased 22 and 26 basis points for the three and nine months ended October 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.

14 unchanged sentences

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 July 31,

For the Trailing Twelve Months Ended October 31,

(Amounts in millions) 2025 2024

21 unchanged sentences

(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,

As of October 31,

(Amounts in millions)

5 unchanged sentences

Accrued liabilities 31,521 28,117 26,132

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

ROA was 8.4% and 7.8% for the trailing 12 months ended October 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.

ROI was 14.8% and 15.1% for the trailing 12 months ended October 31, 2025 and 2024, respectively.

The decrease in ROI was the result of an increase in average invested capital due to higher purchases of property and equipment.

ROI benefited from increased operating income due to improved business performance, which was partially offset by the incremental non-cash share-based compensation charge at PhonePe as well as other business restructuring and certain legal matters.

Capital Allocation

1 unchanged sentence

The following table provides additional detail regarding our capital expenditures:

(Amounts in millions) Six Months Ended July 31,

(Amounts in millions) Nine Months Ended October 31,

Allocation of Capital Expenditures 2025 2024

3 unchanged sentences

New stores and clubs, including expansions and relocations 841 267

16,599 14,529

Walmart International 2,028 2,167

11 unchanged sentences

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.

Six Months Ended July 31,

Nine Months Ended October 31,

(Amounts in millions) 2025 2024

6 unchanged sentences

(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 $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.

Net cash provided by operating activities was $27.5 billion for the nine months ended October 31, 2025, which represents an increase of $4.5 billion when compared to the same period in the previous fiscal year.

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

Free cash flow for the nine months ended October 31, 2025 was $8.8 billion, which represents an increase of $2.6 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 $1.9 billion in capital expenditures to support our investment strategy.

1 unchanged sentence

Consolidated Results of Operations

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

Three Months Ended October 31, Nine Months Ended October 31,

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

23 unchanged sentences

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

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.

Our total revenues increased $9.9 billion or 5.8% and $22.1 billion or 4.4% for the three and nine months ended October 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.

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

Net sales for the three and nine months ended October 31, 2025 were negatively affected by $0.2 billion and $4.0 billion, respectively, in currency exchange rate fluctuations.

Membership and other income increased $0.1 billion or 9.0% and $0.3 billion or 6.0% for the three and nine months ended October 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 2 and 6 basis points for the three and nine months ended October 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.

segment, driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories and the timing of Flipkart's BBD sales event in the Walmart International segment, which primarily occurred in the fourth quarter of fiscal 2025 but mostly shifted to the third quarter of fiscal 2026.

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.

The increase for the nine months ended October 31, 2025 was also impacted by higher self-insured general liability claims expense in the U.S.

of approximately $0.8 billion, 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 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.

Other gains and losses for the three and nine months ended October 31, 2025 consisted of net gains of $2.1 billion and $4.2 billion, respectively, compared to net losses of $0.1 billion and $0.5 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 was 25.6% and 23.9% for the three and nine months ended October 31, 2025, respectively, compared to 22.7% and 23.8% for the same periods in the previous fiscal year.

The increase in effective tax rate is primarily due to the share-based compensation charge recorded at the Company's PhonePe subsidiary, which provided no tax benefit.

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.

1 unchanged sentence

statutory rate.

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,

As a result of the factors discussed above, consolidated net income increased $1.4 billion and $3.1 billion for the three and nine months ended October 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 $0.77 and $2.20 for the three and nine months ended October 31, 2025, respectively, which represents an increase of $0.20 and $0.45 when compared to the same periods in the previous fiscal year.

Three Months Ended October 31, Nine Months Ended October 31,

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

14 unchanged sentences

Net sales for the Walmart U.S.

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.

segment increased $5.8 billion or 5.1% and $14.9 billion or 4.4% for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were due to comparable sales of 4.8% and 4.2% for the three and nine months ended October 31, 2025, 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 4.0% and 3.7% to comparable sales for the three and six months ended July 31, 2025, respectively.

segment's eCommerce net sales positively contributed approximately 4.4% and 3.9% to comparable sales for the three and nine months ended October 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 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.

Membership and other income increased 7.6% and 6.3% for the three and nine months ended October 31, 2025, respectively, primarily driven by double-digit percentage growth in membership fee income from Walmart+.

Gross profit rate increased 19 and 24 basis points for the three and nine months ended October 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.

Operating expenses as a percentage of net sales increased 15 and 22 basis points for the three and nine months ended October 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.

As a result of the factors discussed above, operating income increased $0.3 billion and $0.8 billion for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

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

Three Months Ended October 31, Nine Months Ended October 31,

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

11 unchanged sentences

Retail square feet at period end 274 271 274 271

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.

Net sales for the Walmart International segment increased $3.3 billion or 10.8% and $4.8 billion or 5.4% for the three and nine months ended October 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 and the shift in timing of Flipkart's BBD sales event, partially offset by negative fluctuations in currency exchange rates of $0.2 billion and $4.0 billion for the three and nine months ended October 31, 2025, respectively.

Gross profit rate decreased 68 and 72 basis points for the three and nine months ended October 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, including timing from BBD, partially offset by growth in higher margin businesses.

Operating expenses as a percentage of net sales increased 115 and 44 basis points for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year, primarily due to a charge of $0.7 billion related to PhonePe's modification of certain share-based payment arrangements in contemplation of a potential initial public offering (refer to Note 8 ), partially offset by strong sales, BBD timing as well as format mix shifts.

As a result of the factors discussed above, operating income decreased $0.5 billion and $0.9 billion for the three and nine months ended October 31, 2025, when compared to the same periods in the previous fiscal year.

Sam's Club U.S.

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

Three Months Ended October 31, Nine Months Ended October 31,

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

22 unchanged sentences

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

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.

segment increased $0.7 billion or 3.1% and $2.1 billion or 3.1% for the three and nine months ended October 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 2.8% and 3.0% for the three and nine months ended October 31, 2025, respectively, with growth in unit volumes and transactions, reflecting strong sales in grocery, general merchandise and health and wellness.

Sam's Club U.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 comparable sales as a result of lower fuel sales driven by lower fuel prices.

eCommerce net sales positively contributed approximately 3.0% and 3.3% to comparable sales for the three and nine months ended October 31, 2025, respectively, 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 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.

Membership and other income increased 13.1% and 9.3% for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to growth in the membership base and Plus penetration, as well as breakage income related to unredeemed Sam's Cash rewards.

Gross profit rate increased 10 and 11 basis points for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increase for the three months ended October 31, 2025 was primarily due to product mix changes and operational efficiencies.

The increase for the nine months ended October 31, 2025 was primarily due to higher margins in fuel, product mix changes and operational efficiencies, partially offset by higher eCommerce fulfillment costs and the impact of reorganization charges related to strategic supply chain decisions.

Operating expenses as a percentage of net sales increased 29 and 32 basis points for the three and nine months ended October 31, 2025, respectively, when compared to the same periods in the previous fiscal year.

The increase for the three months ended October 31, 2025 was primarily due to associate wage investments, lower fuel sales and higher self-insured general liability claims expense.

The increase for the nine months ended October 31, 2025 was primarily due to lower fuel sales, higher self-insured general liability claims expense and continued technology investments.

As a result of the factors discussed above, operating income increased slightly for both the three and nine months ended October 31, 2025, when compared to the same periods in the previous fiscal year.

Liquidity and Capital Resources

4 unchanged sentences

Net Cash Provided by Operating Activities

Six Months Ended July 31,

Nine Months Ended October 31,

(Amounts in millions) 2025 2024

Net cash provided by operating activities $ 27,452 $ 22,918

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.

Net cash provided by operating activities for the nine months ended October 31, 2025 increased $4.5 billion when compared to the same period in the previous fiscal year.

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

Cash Equivalents and Working Capital Deficit

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.

Cash and cash equivalents were $10.6 billion and $10.0 billion at October 31, 2025 and 2024, respectively.

Our working capital deficit was $22.8 billion as of October 31, 2025, which increased when compared to the $15.6 billion working capital deficit as of October 31, 2024.

The increase in our working capital deficit was primarily driven by the timing of certain payments described above and an increase in short-term borrowings for general corporate purposes, partially offset by an increase in receivables and inventories 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 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.

As of October 31, 2025 and January 31, 2025, cash and cash equivalents of $4.8 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

Six Months Ended July 31,

Nine Months Ended October 31,

(Amounts in millions) 2025 2024

Net cash used in investing activities $ (19,030) $ (12,661)

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 investing activities for the nine months ended October 31, 2025 increased $6.4 billion when compared to the same period in the previous fiscal year.

The increase is primarily due to the change in net proceeds received from the sale of certain strategic investments as well as increased payments for property and equipment.

Net Cash Used in Financing Activities

Six Months Ended July 31,

Nine Months Ended October 31,

(Amounts in millions) 2025 2024

Net cash used in financing activities $ (7,012) $ (9,673)

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.

Net cash used in financing activities decreased $2.7 billion for the nine months ended October 31, 2025, when compared to the same period in the previous fiscal year.

The decrease is primarily due to proceeds from new long-term debt issued and higher short-term borrowings in the current fiscal year, primarily offset by increased share repurchases.

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 July 31, 2025, all undrawn.

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

Long-term Debt

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

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

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

5 unchanged sentences

Currency and other adjustments

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

Balances as of October 31, 2025 $ 3,523 $ 34,445 $ 37,968

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

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.

During the nine months ended October 31, 2025, our total outstanding long-term debt increased $2.0 billion, primarily due to the issuance of new long-term debt in April 2025 less current year debt repayments.

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

6 unchanged sentences

December 12, 2025 January 5, 2026

The dividend installments payable on April 7, 2025 and May 27, 2025 were paid as scheduled.

The dividend installments payable on April 7, 2025, May 27, 2025 and September 2, 2025 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 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.

All repurchases made during the nine months ended October 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 October 31, 2025, authorization for $5.1 billion of share repurchases remained under the share repurchase program.

Any repurchased shares are constructively retired and returned to an unissued status.

1 unchanged sentence

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 six months ended July 31, 2025 and 2024:

Six Months Ended July 31,

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

Nine Months Ended October 31,

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

2 unchanged sentences

Total amount paid for share repurchases $ 7,008 $ 3,049

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.

During the nine months ended October 31, 2025, the Company repurchased $7.0 billion in shares of its common stock, an increase of $4.0 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.

5 unchanged sentences

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 July 31, 2025, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

As of October 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

13 unchanged sentences

Financial Statements ," we discuss, under the sub-captions " Settlement of Certain Opioid-Related Matters, " and " Ongoing Opioid-Related Litigation, " certain opioid-related matters, as well as the Prescription Opiate Litigation, and other matters, including certain risks arising therefrom.

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.

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 Matter, " 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 the driver platform under " Driver Platform Matters.

3 unchanged sentences

Asda Equal Value Claims;

Money Transfer Agent Services Litigation;

Money Transfer Agent Services Matter;

Driver Platform Matters;

7 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