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Item 7. Management’s Discussion and Analysis

2026-03-13 compared with 2025-03-14 · 138 added, 147 removed, 399 unchanged (42% of the section changed)

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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.

Management also measures the results of comparable store and club sales, or comparable sales, a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, 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 as well as certain other business offerings that are part of our ecosystem, such as our advertising net sales.

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 5%.

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.

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Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations.

Volatility in currency exchange rates have impacted and may continue to impact the results, including net sales and operating income, of the Company and the Walmart International segment.

We have taken certain strategic actions across our segments, including an increased emphasis on investments in automation and supply chain as well as diversifying our earnings streams through category and business mix.

In December 2024, the Walmart U.S.

segment completed the acquisition of VIZIO Holding Corp.

for net cash consideration of $1.9 billion.

Additionally, we have taken actions in the Walmart International segment to reshape our portfolio including the following highlights over the last three years:

• In November 2022, we completed the buyout of the noncontrolling interest shareholders of our Massmart subsidiary (Refer to Note 3 ) and in December 2022, we exited operations in certain countries in Africa.

• In December 2022, we increased our ownership in PhonePe as part of the separation from our majority-owned Flipkart subsidiary.

Refer to Note 3 .

• In August 2024, we sold our equity investment in JD.com for net proceeds of $3.6 billion.

Refer to Note 8 .

We operate in a 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, health and wellness, financial services, advertising and data service 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 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 and pandemics, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, disruptions in supply chain, inventory management, cost and availability of goods, currency exchange rate fluctuations, customer preferences, inflation, deflation, 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 its securities can be found herein under " Item 1A.

Recent Developments, Macroeconomic Conditions and Potential Impacts

We expect continued uncertainty in our business and the global economy due to the following factors:

tariffs and trade restrictions;

inflationary trends;

fluctuations in global currencies;

swings in macroeconomic conditions and their effect on consumer confidence;

changes in employment trends;

volatility in fuel prices;

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.

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.

Risk Factors ."

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

Our net sales and gross profit margin are influenced in part by our pricing and merchandising strategies in response to cost increases.

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These strategies have and may continue to impact gross profit as a percentage of net sales.

We expect continued uncertainty in our business and the global economy due to inflationary trends;

tariffs and trade restrictions;

fluctuations in global currencies;

swings in macroeconomic conditions and their effect on consumer confidence;

volatility in employment trends;

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

In July 2025, the One Big Beautiful Bill Act (the "OBBB 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 OBBB Act were not material to our income tax expense or effective tax rate.

Certain provisions decreased cash taxes paid in fiscal 2026 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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We define our financial priorities as follows:

• Growth - serve customers through a seamless omni-channel experience;

• Growth - serve customers through a seamless omnichannel experience;

• Margin - improve our operating income margin through productivity initiatives as well as category and business mix;

• Returns - improve our Return on Investment through margin improvement and disciplined capital spend.

Our objective of prioritizing growth means we will focus on serving customers and members however they want to shop through our omni-channel business model.

Our objective of prioritizing growth means we will focus on serving customers and members however they want to shop through our omnichannel business model.

This includes increasing comparable store and club sales through increasing membership at Sam's Club U.S.

and through Walmart+, accelerating eCommerce sales growth and expansion of omni-channel initiatives that complement our strategy.

and through Walmart+, accelerating eCommerce sales growth and expansion of omnichannel initiatives that complement our strategy.

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.

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 omnichannel transactions which are fulfilled through our stores and clubs as well as certain other business offerings that are part of our ecosystem, such as our advertising net sales.

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.

Our discussion of our comparable sales below refers to our calendar comparable sales calculated using our fiscal calendar, which may result in differences when compared to comparable sales using the retail calendar (also known as the 4-5-4 calendar) as provided in our quarterly earnings releases.

We report on comparable sales in the U.S.

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2.9% 4.7% (1.9)% (1.5)%

4.8% 4.9% (0.3)% (0.6)%

Comparable sales in the U.S., including fuel, increased 4.8% and 4.9% in fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

comparable sales increased 4.3% and 4.8% in fiscal 2026 and 2025, respectively.

For fiscal 2025, comparable sales growth was driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

For fiscal 2024, comparable sales growth was driven by growth in transactions combined with growth in average ticket, including strong sales in grocery and health and wellness.Walmart U.S.

eCommerce sales positively contributed approximately 2.9% and 2.6% to comparable sales for fiscal 2025 and 2024, respectively, which was primarily driven by store-fulfilled pickup and delivery.

Comparable sales at Sam's Club U.S.

increased 4.7% and 2.3% in fiscal 2025 and 2024, respectively.

For fiscal 2025, Sam's Club U.S.

comparable sales increased due to growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

Comparable sales in fiscal 2026 were driven by growth in average ticket and transactions, and also reflected growth in unit volumes and strength in all merchandise categories.

Comparable sales in fiscal 2025 were driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

eCommerce sales positively contributed approximately 4.3% and 2.9% to comparable sales for fiscal 2026 and 2025, respectively.

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

Sam's Club U.S.

comparable sales for fiscal 2024 increased due to growth in transactions and average ticket,

including strong sales in grocery and health and wellness.

Additionally, fiscal 2025 and 2024 growth was partially offset by lower fuel sales primarily due to lower market prices.

comparable sales increased 2.9% and 4.7% in fiscal 2026 and 2025, respectively.

For fiscal 2026, comparable sales were driven by growth in unit volumes and transactions, reflecting strong sales in grocery, health and wellness and general merchandise.

For fiscal 2025, comparable sales were driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

Additionally, fiscal 2026 and 2025 growth was partially offset by lower fuel sales, negatively impacting comparable sales by 1.9% and 1.5%, respectively, primarily due to lower fuel prices.

Sam's Club U.S.

eCommerce sales positively contributed approximately 2.3% and 1.7% to comparable sales for fiscal 2025 and 2024, respectively, which was primarily driven by club-fulfilled curbside pickup and delivery.

eCommerce sales positively contributed approximately 3.3% and 2.3% to comparable sales for fiscal 2026 and 2025, respectively, which reflects continued strength in member engagement with omnichannel offerings.

Our objective of prioritizing margin focuses on growth with a focus on incremental margin accretion through a combination of productivity improvements as well as category and business mix.

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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.

Additionally, we focus on our mix of businesses, including expanding our ecosystem in higher margin areas, such as digital advertising and marketplace.

Additionally, we focus on our mix of businesses, including expanding our ecosystem in higher margin areas, such as digital advertising.

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

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Gross profit as a percentage of net sales ("gross profit rate") increased 8 and 40 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increases were primarily driven by the Walmart U.S.

segment, due to managing prices aligned to our competitive historic price gaps, as well as growth in higher margin businesses globally, partially offset by mix shifts into lower margin merchandise categories.

Additionally, the increase in fiscal 2024 benefited from lapping higher markdowns incurred in the prior year.

Operating expenses as a percentage of net sales increased 36 and decreased 60 basis points for fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

The increase in fiscal 2026 was primarily driven by the Walmart U.S.

segment, due to disciplined inventory management, as well as growth in higher margin businesses globally.

The increase in fiscal 2025 was primarily driven by the Walmart U.S.

segment, due to managing prices aligned to our competitive historic price gaps, as well as growth in higher margin businesses globally.

In both years, the increases were partially offset by mix shifts into lower margin merchandise categories across segments, as well as ongoing channel and format mix shifts in the Walmart International segment.

Operating expenses as a percentage of net sales increased 20 and 36 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increase for fiscal 2026 was primarily due to higher self-insured general liability claims expense in the U.S.

of approximately $0.9 billion, influenced by rising costs to resolve claims across retail and related industries, a charge of $0.7 billion related to modification of certain share-based compensation arrangements for our PhonePe subsidiary and increased depreciation related to our capital investments.

The increase for fiscal 2025 was primarily due to higher variable pay as a result of exceeding planned performance, increased marketing and higher depreciation expenses.

The decrease for fiscal 2024 was primarily due to lapping charges of $3.3 billion related to opioid-related legal settlements and $0.8 billion related to the reorganization and restructuring of certain businesses in the Walmart International segment in the prior year.

Operating income as a percentage of net sales increased 15 and 83 basis points for fiscal 2025 and 2024, respectively, due to the factors described above, as well as from strong growth in membership income globally.

Operating income as a percentage of net sales decreased 13 basis points for fiscal 2026 and increased 15 basis points for fiscal 2025, respectively, primarily due to the factors described above and strong growth in membership income globally.

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

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Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts.

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 ROA, the most directly comparable GAAP financial measure.

Our calculation of ROI is considered a non-GAAP financial measure because it uses financial measures that differ from those used in ROA, the most directly comparable GAAP financial measure.

ROA is consolidated net income for the period divided by average total assets for the period.

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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.

ROA was 7.9% and 6.6% for fiscal 2025 and 2024, respectively.

The increase in ROA was primarily due to an increase in consolidated net income during the trailing 12 month period, as a result of higher operating income and changes in the fair value of our equity and other investments.

ROI was 15.5% and 15.0% for fiscal 2025 and 2024, respectively.

The increase in ROI was the result of an increase in operating income, primarily due to improvements in business performance, partially offset by an increase in average invested capital primarily due to higher purchases of property and equipment.

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:

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Return on investment (ROI) 15.1 % 15.5 %

(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.

(1) The average is calculated using the account balance at the end of the current and prior comparative periods.

As of January 31,

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Accrued liabilities 31,187 29,345 28,759

Strategic Capital Allocation

ROA was 8.2% and 7.9% for fiscal 2026 and 2025, 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 15.1% and 15.5% for fiscal 2026 and 2025, respectively.

The decrease in ROI was primarily due to 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 certain legal matters and other business restructuring charges.

Capital Allocation

Our strategy includes allocating the majority of our capital to higher-return areas focused on automation such as eCommerce, supply chain and store and club investments.

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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 $36.4 billion, $35.7 billion and $28.8 billion for fiscal 2025, 2024 and 2023, respectively.

We generated free cash flow of $12.7 billion, $15.1 billion and $12.0 billion for fiscal 2025, 2024 and 2023, respectively.

The increase in net cash provided by operating activities in fiscal 2025 is primarily due to an increase in cash provided by operating income and lapping the payment of accrued opioid legal charges in the prior year, partially offset by increased inventory purchases.

Free cash flow for fiscal 2025 decreased when compared to fiscal 2024 due to an increase of $3.2 billion in capital expenditures to support our investment strategy, partially offset by the increase in net cash provided by operating activities described above.

Net cash provided by operating activities for fiscal 2024 increased when compared to fiscal 2023 primarily due to higher cash provided by operating income, as well as timing of certain payments and strategic inventory management as part of working capital initiatives, partially offset by payment of the remaining accrued opioid legal charges.

Free cash flow for fiscal 2024 increased when compared to fiscal 2023 due to the increase in net cash provided by operating activities described above, partially offset by an increase of $3.7 billion in capital expenditures to support our investment strategy.

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.

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

The increase in net cash provided by operating activities in fiscal 2026 is primarily due to an increase in cash provided by operating income, lower cash tax payments and the timing of certain payments.

Free cash flow for fiscal 2026 increased when compared to fiscal 2025 due to an increase in cash provided by operating income, lower cash tax payments and timing of certain payments, partially offset by an increase of $2.9 billion in capital expenditures to support our omnichannel growth strategy.

Net cash provided by operating activities for fiscal 2025 increased when compared to fiscal 2024 primarily due to an increase in cash provided by operating income and lapping the payment of accrued opioid legal charges in the prior year, partially offset by increased inventory purchases.

Free cash flow for fiscal 2025 decreased when compared to fiscal 2024 due to an increase of $3.2 billion in capital expenditures to support our omnichannel growth strategy, partially offset by the increase in net cash provided by operating activities described above.

Results of Operations

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Operating income 4.2 % 4.4 % 4.2 %

Unit counts at period end

10,771 10,616 10,623

Retail unit counts at period end 10,955 10,771 10,616

Retail square feet at period end

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

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

Net sales were negatively impacted by $3.2 billion and positively impacted by $3.0 billion of fluctuations in currency exchange rates during fiscal 2025 and 2024, respectively.

Membership and other income increased $1.0 billion and $0.1 billion for fiscal 2025 and fiscal 2024, primarily driven by growth in membership fee income globally.

segments and international markets.

In fiscal 2026, growth was primarily driven by increases in average ticket and transactions, and also reflected growth in unit volumes, while fiscal 2025 growth was primarily driven by higher transactions and unit volumes.

Both years include strength in eCommerce as well as strong sales in grocery and health and wellness, with fiscal 2026 also benefiting from improved sales in general merchandise.

Net sales were negatively impacted by $2.8 billion and $3.2 billion of fluctuations in currency exchange rates during fiscal 2026 and 2025, respectively.

Membership and other income increased $0.3 billion and $1.0 billion for fiscal 2026 and 2025, respectively, primarily driven by growth in membership fee revenue globally, partially offset by decreases in certain other income items, including a reduction in recycling income in fiscal 2026.

Our gross profit rate increased 8 and 40 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increases were primarily driven by the Walmart U.S.

Additionally, the increase in fiscal 2024 benefited from lapping higher markdowns incurred in the prior year.

Our operating expenses as a percentage of net sales increased 36 and decreased 60 basis points for fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

The increase in fiscal 2026 was primarily driven by the Walmart U.S.

segment, due to disciplined inventory management, as well as growth in higher margin businesses globally.

The increase in fiscal 2025 was primarily driven by the Walmart U.S.

segment, due to managing prices aligned to our competitive historic price gaps, as well as growth in higher margin businesses globally.

Our operating expenses as a percentage of net sales increased 20 and 36 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increase for fiscal 2026 was primarily due to higher self-insured general liability claims expense in the U.S.

The increase for fiscal 2025 was primarily due to higher variable pay as a result of exceeding planned performance, increased marketing and higher depreciation expenses.

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 consisted of net losses of $0.8 billion and $3.0 billion in fiscal 2025 and 2024, respectively, which primarily consisted of changes in fair value of our equity and other investments driven by changes in their underlying stock prices.

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

Other gains and losses resulted in a net gain of $2.1 billion and a net loss of $0.8 billion in fiscal 2026 and 2025, respectively, primarily driven by changes in the fair value of our equity and other investments due to fluctuations in their underlying stock prices.

Our effective income tax rate was 24.4%, 23.4%, and 25.5% for fiscal 2026, 2025 and 2024, respectively.

The increase in effective income tax rate in fiscal 2026 compared to fiscal 2025 is primarily due to the share-based compensation charge recorded at the Company's PhonePe subsidiary, which provided no tax benefit.

The decrease in effective tax rate in fiscal 2025 compared to fiscal 2024 is primarily due to the tax impact on changes in fair value of our investments.

The higher effective tax rate in fiscal 2023 compared to fiscal 2025 and fiscal 2024 is primarily related to the tax impacts of the separation of Flipkart and PhonePe.

Our effective income tax rate may also 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 to the effective income tax rates for fiscal 2026, 2025 and 2024 is provided in Note 8 .

As a result of the factors discussed above, we reported $20.2 billion and $16.3 billion of consolidated net income for fiscal 2025 and 2024, respectively, which represents an increase of $3.9 billion and $5.0 billion for fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

As a result of the factors discussed above, we reported $22.3 billion and $20.2 billion of consolidated net income for fiscal 2026 and 2025, respectively, which represent increases of $2.1 billion and $3.9 billion for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

Diluted net income per common share attributable to Walmart ("EPS") was $2.73, $2.41 and $1.91 for fiscal 2026, 2025 and 2024, respectively.

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Operating income 5.2 % 5.2 % 5.0 %

Unit counts at period end 4,605 4,615 4,717

Retail unit counts at period end 4,611 4,605 4,615

Retail square feet at period end 699 698 699

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The increases in net sales were primarily due to increases in comparable sales of 4.3% and 4.8% for fiscal 2026 and 2025, respectively.

Comparable sales in fiscal 2026 were driven by growth in average ticket and transactions, and also reflected growth in unit volumes and strength in all merchandise categories.

Comparable sales in fiscal 2025 were driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

Comparable sales in fiscal 2024 were driven by growth in transactions combined with growth in average ticket, including strong sales in grocery and health and wellness.

eCommerce sales positively contributed approximately 2.9% and 2.6% to comparable sales for fiscal 2025 and 2024, respectively, which was primarily driven by store-fulfilled pickup and delivery.

Membership and other income increased $0.6 billion and $0.1 billion for fiscal 2025 and fiscal 2024, primarily driven by growth in membership fee income from Walmart+ and recycling income.

eCommerce sales positively contributed approximately 4.3% and 2.9% to comparable sales for fiscal 2026 and 2025, respectively.

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

Membership and other income increased slightly for fiscal 2026 and increased $0.6 billion for fiscal 2025.

In both years, the increases were primarily driven by double-digit growth in membership fee revenue from Walmart+.

For fiscal 2026, the increase was partially offset by decreases in certain other income items, including a reduction in recycling income.

Fiscal 2025 also benefited from higher recycling income compared to the previous fiscal year.

Gross profit rate increased 22 and 47 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increase in fiscal 2025 gross profit rate was primarily driven by managing prices aligned to our competitive historic price gaps and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

The increase in fiscal 2024 gross profit rate was primarily due to managing prices aligned to our competitive historic price gaps and lapping higher net markdowns incurred in the prior year, partially offset by product mix shifts into lower margin categories.

The increase for fiscal 2026 was primarily driven by disciplined inventory management and growth in higher margin businesses, partially offset by mix shifts into lower margin merchandise categories.

The increase for fiscal 2025 was primarily due to managing prices aligned to our competitive historic price gaps and growth in higher margin businesses, partially offset by product mix shifts into lower margin categories.

Operating expenses as a percentage of segment net sales increased 15 and 44 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

The increase for fiscal 2025 was primarily due to increased marketing expenses, higher variable pay as a result of exceeding planned performance and increased depreciation expenses.

For fiscal 2024, the increase was driven by higher variable pay relative to the prior year as a result of exceeding our planned performance.

The increase for fiscal 2026 was primarily due to higher self-insured general liability claims expense and increased depreciation related to our capital investments.

For fiscal 2025, the increase was primarily due to increased marketing expenses, higher variable pay as a result of exceeding planned performance and increased depreciation expenses.

As a result of the factors discussed above, segment operating income increased $1.3 billion and $1.7 billion for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

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Operating income 3.9 % 4.5 % 4.3 %

Unit counts at period end 5,566 5,402 5,306

Retail unit counts at period end 5,743 5,566 5,402

Retail square feet at period end 278 274 274

Net sales for the Walmart International segment increased $8.5 billion or 7.0% and $7.2 billion or 6.3% for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

For fiscal 2025, the increase was primarily due to positive comparable sales in all of our international markets, which included strength in eCommerce, partially offset by negative fluctuations in currency exchange rates of $3.2 billion.

For fiscal 2024, the increase was primarily due to positive comparable sales across our international markets and positive fluctuations in currency exchange rates of $3.0 billion.

Gross profit rate increased 20 basis points for both fiscal 2025 and 2024 when compared to the previous fiscal year.

For fiscal 2025, the increase was primarily due to improved eCommerce margin and business mix changes, partially offset by ongoing channel and format mix changes.

For fiscal 2024, the increase was primarily driven by supply chain efficiencies partially offset by ongoing channel and format mix shifts.

Operating expenses as a percentage of segment net sales decreased 5 and 152 basis points for fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

The decrease in operating expenses as a percentage of segment net sales for fiscal 2025 was primarily due to increased sales driving expense leverage, partially offset by planned investments in associate wages and strategic priorities in Mexico and Central America.

The decrease in operating expenses as a percentage of segment net sales for fiscal 2024, was primarily due to the lapping of business reorganization and restructuring charges incurred related to Flipkart and Massmart in fiscal 2023 and an increase in sales in fiscal 2024.

As a result of the factors discussed above, segment operating income increased $0.6 billion and $1.9 billion for fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

Net sales growth was primarily due to positive comparable sales growth across our international markets, which includes strong eCommerce growth of $6.3 billion and $4.7 billion for fiscal 2026 and 2025, respectively.

The increases were partially offset by negative fluctuations in currency exchange rates of $2.8 billion and $3.2 billion for fiscal 2026 and 2025, respectively.

Gross profit rate decreased 49 basis points for fiscal 2026 and increased 20 basis points for fiscal 2025, when compared to the previous fiscal year.

For fiscal 2026, the decrease was primarily due to 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.

The increase in fiscal 2025 was primarily due to improved eCommerce margin and business mix changes, partially offset by ongoing channel and format mix changes.

Operating expenses as a percentage of segment net sales increased 10 basis points for fiscal 2026 and decreased 5 basis points for fiscal 2025, when compared to the previous fiscal year.

The increase for fiscal 2026 was 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 public offering (refer to Note 3 ), partially offset by strong sales as well as format mix shifts.

The decrease for fiscal 2025 was primarily due to increased sales driving expense leverage, partially offset by planned investments in associate wages and strategic priorities in Mexico and Central America.

As a result of the factors discussed above, segment operating income decreased $0.4 billion and increased $0.6 billion for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

Sam's Club U.S.

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Operating income 2.6 % 2.7 % 2.5 %

Unit counts at period end 600 599 600

Retail unit counts at period end 601 600 599

Retail square feet at period end 81 80 80

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The increases in net sales were primarily due to increases in comparable sales, including fuel, of 2.9% and 4.7% for fiscal 2026 and 2025, respectively.

Comparable sales in fiscal 2026 were driven by growth in unit volumes and transactions, reflecting strong sales in grocery, health and wellness and general merchandise.

Comparable sales in fiscal 2025 were driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness.

Comparable sales in fiscal 2024 were driven by growth in transactions and average ticket, including strong sales in grocery and health and wellness.

Additionally, fiscal 2025 and 2024 growth was partially offset by lower fuel sales primarily due to lower market prices.

Additionally, fiscal 2026 and 2025 growth was partially offset by lower fuel sales, negatively impacting comparable sales by 1.9% and 1.5%, respectively, primarily due to lower fuel prices.

Sam's Club U.S.

Membership and other income increased 8.7% and 13.3% for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

For fiscal 2025 and 2024, the increases were primarily due to growth in membership base and Plus penetration.

Fiscal 2025 and 2024 were also positively impacted by the expiration of a promotional offering offsetting membership fee increases during the fourth quarter of fiscal 2024.

For fiscal 2026 and 2025, the increases were primarily due to growth in the membership base and Plus penetration.

Fiscal 2026 was also positively impacted by additional breakage income related to unredeemed Sam's Cash rewards, while fiscal 2025 was positively impacted by the expiration of a promotional offering offsetting membership fee increases during the fourth quarter of fiscal 2024.

Gross profit rate increased 4 and 37 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

For fiscal 2025, the increase in gross profit rate was primarily due to improved operational efficiencies related to merchandise flow and increased margins in fuel, partially offset by higher eCommerce fulfillment costs.

For fiscal 2024 , the increase in gross profit rate was primarily due to the lapping of elevated markdowns in the prior year.

Additionally, fiscal 2025 and 2024 gross profit rates were partially offset by product mix shifts into lower margin categories.

The increase for fiscal 2026 was primarily due to operational efficiencies and higher margins in fuel, partially offset by higher eCommerce fulfillment costs and the impact of reorganization charges related to strategic supply chain decisions.

The increase for fiscal 2025 was primarily due to improved operational efficiencies related to merchandise flow and increased margins in fuel, partially offset by higher eCommerce fulfillment costs and product mix shifts into lower margin categories.

Operating expenses as a percentage of segment net sales increased 22 and 44 basis points for fiscal 2026 and 2025, respectively, when compared to the previous fiscal year.

Fiscal 2025 operating expenses as a percentage of net sales increased primarily due to increased compensation related expenses, including associate wage investments and higher variable pay as a result of exceeding our planned performance, as well as elevated technology spend.

Fiscal 2024 operating expenses as a percentage of net sales increased primarily due to lower fuel sales and elevated technology spend.

As a result of the factors discussed above, segment operating income increased $0.2 billion for both fiscal 2025 and 2024, respectively, when compared to the previous fiscal year.

The increase for fiscal 2026 was primarily due to lower fuel sales and higher self-insured general liability claims expense.

The increase for fiscal 2025 was primarily due to increased compensation related expenses, including associate wage investments and higher variable pay as a result of exceeding our planned performance, as well as elevated technology spend.

As a result of the factors discussed above, segment operating income increased slightly for fiscal 2026 and increased $0.2 billion for fiscal 2025, when compared to the previous fiscal year.

Liquidity and Capital Resources

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Net cash provided by operating activities $ 41,565 $ 36,443 $ 35,726

Net cash provided by operating activities was $36.4 billion, $35.7 billion and $28.8 billion for fiscal 2025, 2024 and 2023, respectively.

The increase in net cash provided by operating activities in fiscal 2025, when compared to the previous fiscal year, is primarily due to an increase in cash provided by operating income and lapping the payment of accrued opioid legal charges in the prior year, partially offset by increased inventory purchases.

The increase in net cash provided by operating activities for fiscal 2024, when compared to the previous fiscal year, was primarily due to higher cash provided by operating income, as well as timing of certain payments and strategic inventory management as part of working capital initiatives, partially offset by payment of the remaining accrued opioid legal charges.

Net cash provided by operating activities increased $5.1 billion for fiscal 2026 when compared to the previous fiscal year.

The increase is primarily due to an increase in cash provided by operating income, lower cash tax payments and timing of certain payments.

The increase in net cash provided by operating activities for fiscal 2025, when compared to the previous fiscal year, was primarily due to an increase in cash provided by operating income and lapping the payment of accrued opioid legal charges in the prior year, partially offset by increased inventory purchases.

Cash Equivalents and Working Capital Deficit

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Our working capital deficit, defined as total current assets less total current liabilities, was $22.6 billion and $17.1 billion as of January 31, 2026 and 2025, respectively.

The increase in our working capital deficit is primarily driven by an increase in short-term borrowings for general corporate purposes and accounts payable due to timing of payments, partially offset by increased inventories and receivables related to higher sales growth.

The increase in our working capital deficit was primarily driven by timing of certain payments combined with an increase in short-term borrowings for general corporate purposes, partially offset by increased inventories and receivables related to higher sales growth as well as higher cash balances.

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.

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Net cash used in investing activities $ (26,350) $ (21,379) $ (21,287)

Net cash used in investing activities was $21.4 billion, $21.3 billion and $17.7 billion for fiscal 2025, 2024 and 2023, respectively, and generally consisted of capital expenditures.

Net cash used in investing activities generally consisted of capital expenditures.

Net cash used in investing activities increased $5.0 billion for fiscal 2026 when compared to the previous fiscal year.

The increase is primarily due to increased purchases of property and equipment as well as the acquisition of VIZIO for net consideration of $1.9 billion, partially offset by net proceeds received from sales of certain strategic investments, including $3.6 billion related to the sale of our JD.com investment.

Net cash used in investing activities increased $3.6 billion for fiscal 2024 when compared to the previous fiscal year, primarily due to increased payments for property and equipment.

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, partially offset by the acquisition of VIZIO for net consideration of $1.9 billion in the prior year.

Net cash used in investing activities increased $0.1 billion for fiscal 2025, when compared to the previous fiscal year, primarily due to increased payments for property and equipment as well as the acquisition of VIZIO for net consideration of $1.9 billion, partially offset by net proceeds received from sales of certain strategic investments, including $3.6 billion related to the sale of our JD.com investment.

Capital expenditures

Refer to the " Strategic Capital Allocation " section in our Company Performance Metrics for capital expenditure detail for fiscal 2025 and 2024.

Refer to the " Capital Allocation " section in our Company Performance Metrics for capital expenditure detail for fiscal 2026 and 2025.

For the fiscal year ending January 31, 2027 ("fiscal 2027"), we project capital expenditures will be approximately $25 billion to $27 billion, with a focus on technology, supply chain and customer-facing initiatives.

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

Fiscal 2025 net cash used in financing activities increased $1.4 billion when compared to the previous fiscal year.

The increase is primarily due to lapping debt issuances in the prior fiscal year and increased share repurchases, partially offset by the purchase of certain noncontrolling interests in the prior fiscal year and higher short-term borrowings.

Fiscal 2026 net cash used in financing activities decreased $1.3 billion when compared to the previous fiscal year.

The decrease was primarily due to fewer share repurchases, partially offset by the purchase of certain noncontrolling interests.

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

Fiscal 2025 net cash used in financing activities increased $1.4 billion when compared to the previous fiscal year.

The increase was primarily due to lapping debt issuances in the prior fiscal year and increased share repurchases, partially offset by the purchase of certain noncontrolling interests in the prior fiscal year and higher short-term borrowings.

Purchase and Sale of Subsidiary Stoc k

During fiscal 2024, we paid $3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle the liability to former noncontrolling interest holders of PhonePe.

During fiscal 2024, we paid $3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle a $0.9 billion liability to former noncontrolling interest holders of PhonePe in connection with the separation from Flipkart in fiscal 2023.

Additionally, we received $0.7 billion related to new rounds of equity funding for the Company's majority owned PhonePe subsidiary.

During fiscal 2023, we completed a $0.4 billion buyout of the noncontrolling interest shareholders of our Massmart subsidiary and completed a $0.4 billion acquisition of Alert Innovation, bringing our ownership to approximately 100% of both Massmart and Alert Innovation.

The Alert Innovation entity was subsequently sold and deconsolidated in fiscal 2025.

Short-term Borrowings

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to further support our Walmart International segment operations, as needed.

As of January 31, 2025, we have $2.1 billion of syndicated and fronted letters of credit available, of which $1.5 billion was drawn and represents an unrecorded current obligation.

As of January 31, 2026, we have $2.0 billion of syndicated and fronted letters of credit available, of which $1.7 billion was issued and represents an unrecorded current obligation.

Long-term Debt

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Balances as of February 1, 2025 $ 2,598 $ 33,401 $ 35,999

$ 3,447 $ 36,132 $ 39,579

Proceeds from issuance of long-term debt — 3,983 3,983

Repayments of long-term debt (2,625) — (2,625)

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Balances as of January 31, 2026 $ 3,542 $ 34,624 $ 38,166

Our total outstanding long-term debt decreased $3.6 billion during fiscal 2025, primarily due to maturities of certain long-term debt.

Our total outstanding long-term debt increased $2.2 billion during fiscal 2026, primarily due to issuances of long-term debt.

Refer to Note 5 to our Consolidated Financial Statements for details on the issuances of long-term debt.

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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 fiscal 2025 were made under the current $20.0 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 January 31, 2025, authorization for $12.0 billion of share repurchases remained under the share repurchase program.

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

All repurchases during fiscal 2026 were made under the $20.0 billion share repurchase program approved in November 2022, of which authorization for $4.0 billion of share repurchases remained as of January 31, 2026.

In February 2026, the Board of Directors approved a new $30.0 billion share repurchase authorization, which has no expiration date or other restrictions limiting the period over which the Company can make repurchases, and beginning February 23, 2026, replaced the remaining capacity under the prior authorization.

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.

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Total amount paid for share repurchases $ 8,088 $ 4,494 $ 2,779

During fiscal 2026, the Company repurchased $8.1 billion in shares of its common stock, an increase of $3.6 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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Other material cash requirements from known contractual and other obligations include short-term borrowings, long-term debt and related interest payments, leases and purchase obligations.

See Note 6 and Note 7 to our Consolidated Financial Statements for information regarding outstanding short-term borrowings and long-term debt, and leases, respectively.

See Note 4 , Note 5 and Note 6 to our Consolidated Financial Statements for information regarding accrued liabilities, outstanding short-term borrowings and long-term debt, and leases, respectively.

As of January 31, 2026, the Company has $41.4 billion of unrecorded purchase obligations outstanding, of which $18.3 billion is due within one year.

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Financial Statements and Supplementary Data ," 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 that Note 10 , 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 that Note 9 , 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.

" In Note 9 , 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 9 , 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.

We reference various legal proceedings related to the Prescription Opiate Litigation, the DOJ Opioid Civil Litigation, Opioids-Related Securities Class Actions, Shareholder Derivative Litigation and False Claims Act Litigation;

We reference various legal proceedings related to the Prescription Opiate Litigation, the DOJ Opioid Civil Litigation, Opioids-Related Securities Class Actions and False Claims Act Litigation;

Asda Equal Value Claims;

Money Transfer Agent Services Litigation;

Driver Platform Litigation;

and Mexico Antitrust Matter in Part I of this Annual Report on Form 10-K under the caption " Item 3.

Money Transfer Agent Services Matter;

Federal Trade Commission and State Attorneys General Driver Platform Litigation;

Mexico Antitrust Matter and an India Antitrust Matter in Part I of this Annual Report on Form 10-K under the caption " Item 3.

Legal Proceedings ," under the sub-caption " I.

Supplemental Information." The foregoing matters and other matters described elsewhere in this Annual Report on Form 10-K 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.

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

Environmental Protection Agency in Part I of this Annual Report on Form 10-K under the caption " Item 3.

Legal Proce edings ," under the sub caption " II .

E nvi ron mental Matters ." The foregoing matters and other matters described elsewhere in this Annual Report on Form 10-K 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.

Summary of Critical Accounting Estimates

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Management continually reviews our accounting policies including how they are applied and how they are reported and disclosed in our financial statements.

Following is a summary of our critical accounting estimates and how they are applied in preparation of the financial statements.

Following is a summary of our critical accounting estimates and how they are applied in the preparation of the financial statements.

Contingencies

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If a loss or an additional loss has at least a reasonable possibility of occurring and the impact on the financial statements would be material, we provide disclosure of the loss contingency in the footnotes to our financial statements.

We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a

reasonable estimate of the loss or the range of the loss can be made.

We review all contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or the range of the loss can be made.

Although we are not able to predict the outcome or reasonably estimate a range of possible losses in certain matters described in Note 9 to our Consolidated Financial Statements and have not recorded an associated accrual related to these matters, an adverse judgment or negotiated resolution in any of these matters could have a material adverse effect on our business, reputation, financial position, results of operations or cash flows.

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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-K

Item 7. Management’s Discussion and Analysis