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Item 2. Management’s Discussion and Analysis

2026-08-28 compared with 2026-05-29 · 126 added, 110 removed, 300 unchanged (44% 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, 2027 ("fiscal 2027") and the fiscal year ended January 31, 2026 ("fiscal 2026"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three months ended April 30, 2026, 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, 2026, 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, 2026.

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, 2027 ("fiscal 2027") and the fiscal year ended January 31, 2026 ("fiscal 2026"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three and six months ended July 31, 2026, 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, 2026, 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, 2026.

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 its chief operating decision maker.

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

tariffs and trade restrictions, including potential refunds;

tariffs and trade restrictions, including tariff refunds;

inflationary trends;

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Other Information ."

The Company is participating in the process established by the U.S.

Customs and Border Protection for refunds of tariffs that the Company paid as the importer of record under the International Emergency Economic Powers Act.

The timing, amounts and ultimate resolution of any refunds remain uncertain and subject to ongoing legal and administrative developments.

Accordingly, the Company did not recognize any amounts related to these claims in the three months ended April 30, 2026.

The Company engaged in the process established by the U.S.

Customs and Border Protection ("CBP") for refunds of tariffs that the Company paid as the importer of record under the International Emergency Economic Powers Act.

During the quarter ended July 31, 2026, the Company received approximately $2.9 billion in tariff refunds pursuant to the CBP process, which were recorded as a reduction to cost of sales and represent substantially all of the refunds requested by the Company.

A significant portion of these refunds was invested into customer-focused initiatives during the current quarter, primarily through price investment and other cost mitigation strategies, with continued prioritization of price investment expected through fiscal 2027.

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

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

Calendar comparable sales, as well as the impact of fuel, for the three months ended April 30, 2026 and 2025, were as follows:

Three Months Ended April 30,

Calendar comparable sales, as well as the impact of fuel, for the three and six months ended July 31, 2026 and 2025, were as follows:

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

2026 2025 2026 2025 2026 2025 2026 2025

With Fuel Fuel Impact

With Fuel Fuel Impact With Fuel Fuel Impact

3.3 % 4.7 % 0.4 % (0.1) % 3.8 % 3.9 % 0.3 % (0.1) %

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8.6 % 3.3 % 4.2 % (2.6) % 7.3 % 3.1 % 3.2 % (2.6) %

comparable sales increased 4.3% for the three months ended April 30, 2026, driven by growth in transactions and average ticket, reflecting strength in grocery and general merchandise.

eCommerce sales positively contributed approximately 5.2% to comparable sales for the three months ended April 30, 2026.

comparable sales increased 3.3% and 3.8% for the three and six months ended July 31, 2026, respectively, driven by growth in transactions and average ticket, reflecting strength in grocery, partially offset by a decrease in health and wellness primarily due to the impact from maximum fair price regulation on certain prescription drugs, which went into effect in January 2026.

Growth for the six months ended July 31, 2026 also reflects strength in general merchandise.

eCommerce sales positively contributed approximately 4.9% and 5.1% to comparable sales for the three and six months ended July 31, 2026, respectively.

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

Sam's Club U.S.

comparable sales increased 5.9% for the three months ended April 30, 2026, with growth in transactions and unit volumes, reflecting strength in grocery and general merchandise.

Additionally, higher fuel sales, driven by higher fuel prices and volumes, positively impacted comparable sales by 2.1% for three months ended April 30, 2026.

comparable sales increased 8.6% and 7.3% for the three and six months ended July 31, 2026, respectively, with growth in transactions and unit volumes, reflecting strength in grocery and general merchandise.

Additionally, higher fuel sales, driven by higher fuel prices and volumes, positively impacted comparable sales by 4.2% and 3.2% for the three and six months ended July 31, 2026, respectively.

Sam's Club U.S.

eCommerce sales positively contributed approximately 3.1% to comparable sales for the three months ended April 30, 2026, reflecting continued strength in member engagement with omnichannel offerings, such as club-fulfilled delivery.

eCommerce sales positively contributed approximately 3.1% to comparable sales for both the three and six months ended July 31, 2026, reflecting continued strength in member engagement with omnichannel offerings, such as club-fulfilled delivery.

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

Three Months Ended April 30,

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

(Amounts in millions) 2026 2025 2026 2025

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

Gross profit as a percentage of net sales ("gross profit rate") increased 6 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year, primarily due to the Walmart U.S.

segment, driven by merchandise mix shifts and growth in higher margin businesses, including advertising, partially offset by higher fuel costs within our supply chain and increased eCommerce fulfillment costs in the Sam's Club U.S.

Operating expenses as a percentage of net sales increased 33 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year, primarily driven by higher depreciation related to our capital investments, certain business reorganization charges of $0.2 billion within the Walmart U.S.

segment and Corporate and support related to strategic efforts to align our global platforms, as well as higher associate healthcare benefit costs related to increased enrollment and medical cost inflation in the U.S.

Operating income as a percentage of net sales decreased 8 basis points for the three months ended April 30, 2026, primarily due to the factors described above.

Gross profit as a percentage of net sales ("gross profit rate") increased 96 and 53 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year, primarily due to tariff refunds, partially offset by price investments and higher fuel costs within our supply chain.

Gross profit rate also benefited from continued growth in higher margin businesses, including advertising.

Operating expenses as a percentage of net sales increased 11 and 22 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increase for the three months ended July 31, 2026 was primarily driven by higher self-insured general liability claims expense influenced by rising costs to resolve claims across retail and related industries, increased depreciation related to our capital investments and higher associate healthcare benefit costs related to increased enrollment and medical cost inflation.

The increase for the six months ended July 31, 2026 was primarily driven by increased depreciation related to our capital investments, higher associate healthcare benefit costs and higher self-insured general liability claims expense.

The increases for both the three and six months ended July 31, 2026 were partially offset by lapping charges of $0.4 billion related to certain legal matters for the same periods in the previous fiscal year.

Operating income as a percentage of net sales increased 89 and 42 basis points for the three and six months ended July 31, 2026, respectively, primarily due to the factors described above.

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

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The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:

For the Trailing Twelve Months Ended April 30,

For the Trailing Twelve Months Ended July 31,

(Amounts in millions) 2026 2025

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

As of April 30,

As of July 31,

(Amounts in millions)

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Accrued liabilities 30,074 28,821 27,656

ROA was 8.4% and 7.5% for the trailing 12 months ended April 30, 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, partially offset by an increase in average total assets due to higher purchases of property and equipment.

ROI was 14.9% and 15.3% for the trailing 12 months ended April 30, 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 non-cash share-based compensation charge at PhonePe in the trailing 12 months as well as business reorganization charges and certain legal matters.

ROA was 8.0% and 8.3% for the trailing 12 months ended July 31, 2026 and 2025, respectively.

The decrease in ROA was primarily due to net decreases in the fair value of our equity and other investments and an increase in average total assets resulting from higher purchases of property and equipment, offset by an increase in operating income.

ROI was 15.4% and 15.1% for the trailing 12 months ended July 31, 2026 and 2025, respectively.

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

Capital Allocation

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The following table provides additional detail regarding our capital expenditures:

(Amounts in millions) Three Months Ended April 30,

(Amounts in millions) Six Months Ended July 31,

Allocation of Capital Expenditures 2026 2025

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The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash provided by financing activities.

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2026 2025

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$ (14,264) $ (11,199)

Net cash provided by financing activities 2,328 8

Net cash used in financing activities (4,842) (6,993)

(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 $4.7 billion for the three months ended April 30, 2026, which represents a decrease of $0.7 billion when compared to the same period in the previous fiscal year.

The decrease was primarily due to timing of inventory receipts, partially offset by timing of certain payments and an increase in cash provided by operating income.

Free cash flow for the three months ended April 30, 2026 was negative $1.9 billion, which represents a decrease of $2.4 billion when compared to the same period in the previous fiscal year.

The decrease in free cash flow was due to an increase of $1.7 billion in capital expenditures to support our omnichannel growth strategy combined with the decrease in net cash provided by operating activities described above.

Net cash provided by operating activities was $19.7 billion for the six months ended July 31, 2026, which represents an increase of $1.4 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to an increase in cash provided by operating income, partially offset by timing of inventory receipts.

Free cash flow for the six months ended July 31, 2026 was $5.5 billion, which represents a decrease of $1.4 billion when compared to the same period in the previous fiscal year.

The decrease in free cash flow was due to an increase of $2.8 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

Consolidated Results of Operations

Three Months Ended April 30,

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

(Dollar amounts and retail square feet in millions) 2026 2025 2026 2025

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Membership and other income (1)

1,837 1,652 3,904 3,280

Total revenues 187,937 177,402 365,688 343,011

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Retail square feet at period end

1,058 1,052 1,058 1,052

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

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

Our total revenues increased $12.1 billion or 7.3% for the three months ended April 30, 2026 when compared to the same period in the previous fiscal year.

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

Our total revenues increased $10.5 billion or 5.9% and $22.7 billion or 6.6% for the three and six months ended July 31, 2026, 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 transactions.

eCommerce net sales grew $8.5 billion or 26% primarily driven by store and club-fulfilled delivery.

eCommerce net sales grew $8.2 billion or 23% and $16.7 billion or 24% for the three and six months ended July 31, 2026, respectively, primarily driven by store and club-fulfilled delivery.

Net sales growth also reflected strong sales in grocery and general merchandise across our segments.

Net sales for the three months ended April 30, 2026 were positively affected by $2.3 billion in currency exchange rate fluctuations.

Membership and other income increased $0.4 billion or 27.0% for the three months ended April 30, 2026, reflecting 17.4% growth in membership fee revenue with strength across membership programs globally.

Additionally, other income for the three months ended April 30, 2026 benefited from certain miscellaneous income items, none of which are individually material.

Gross profit rate increased 6 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year, primarily due to the Walmart U.S.

Net sales for the three and six months ended July 31, 2026 were positively affected by $1.5 billion and $3.9 billion, respectively, in currency exchange rate fluctuations.

Membership and other income increased $0.2 billion or 11.2% and $0.6 billion or 19.0% for the three and six months ended July 31, 2026, respectively, primarily due to strong growth in membership income globally.

Growth in the six months ended July 31, 2026 also reflects increases in certain miscellaneous items, none of which are individually material.

Gross profit rate increased 96 and 53 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily driven by tariff refunds, partially offset by price investments and higher fuel costs within our supply chain.

Gross profit rate also benefited from continued growth in higher margin businesses, including advertising.

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

Other gains and losses for the three months ended April 30, 2026 consisted of net gains of $0.3 billion, compared to net losses of $0.6 billion for the same period in the previous fiscal year.

Other gains and losses for the three and six months ended July 31, 2026 consisted of net losses of $1.2 billion and $0.9 billion, respectively, compared to net gains of $2.7 billion and $2.1 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 23.2% for the three months ended April 30, 2026, compared to 22.6% for the same period in the previous fiscal year.

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.

Our effective income tax rate was 18.5% and 20.7% for the three and six months ended July 31, 2026, respectively, compared to 23.3% and 23.0% for the same periods in the previous fiscal year.

The decreases in effective tax rate were primarily due to changes in unrecognized tax benefits.

Our effective income tax rate may fluctuate as a result of various factors, including changes in our 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.

operations and international operations, which are subject to statutory rates that may be different than the U.S.

statutory rate.

As a result of the factors discussed above, consolidated net income increased $0.9 billion for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

Accordingly, diluted net income per common share attributable to Walmart was $0.67 for the three months ended April 30, 2026, which represents an increase of $0.11 when compared to the same period in the previous fiscal year.

Three Months Ended April 30,

As a result of the factors discussed above, as well as an interest expense benefit related to changes in unrecognized tax benefits, consolidated net income decreased $0.6 billion and increased $0.2 billion for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

Accordingly, diluted net income per common share attributable to Walmart was $0.80 and $1.46 for the three and six months ended July 31, 2026, respectively, which represents a decrease of $0.08 and an increase of $0.03 when compared to the same periods in the previous fiscal year.

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

(Dollar amounts and retail square feet in millions) 2026 2025 2026 2025

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Membership and other income

750 649 1,676 1,285

Gross profit 36,838 33,674 69,367 64,485

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Net sales for the Walmart U.S.

segment increased $5.0 billion or 4.5% for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was due to comparable sales of 4.3% for the three months ended April 30, 2026, driven by growth in transactions and average ticket, reflecting strength in grocery and general merchandise.

segment increased $4.3 billion or 3.5% and $9.3 billion or 4.0%, for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increases were due to comparable sales of 3.3% and 3.8% for the three and six months ended July 31, 2026, respectively, driven by growth in transactions and average ticket, reflecting strength in grocery, partially offset by a decrease in health and wellness primarily due to the impact from maximum fair price regulation on certain prescription drugs, which went into effect in January 2026.

Growth for the six months ended July 31, 2026 also reflects strength in general merchandise.

The Walmart U.S.

segment's eCommerce net sales positively contributed approximately 5.2% to comparable sales for the three months ended April 30, 2026.

segment's eCommerce net sales positively contributed approximately 4.9% and 5.1% to comparable sales for the three and six months ended July 31, 2026, respectively.

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

Membership and other income increased 45.6% for the three months ended April 30, 2026, primarily driven by increases in certain miscellaneous income items, as well as double-digit percentage growth in membership fee revenue from Walmart+.

Gross profit rate increased 29 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily driven by merchandise mix shifts and growth in higher margin businesses, including advertising, partially offset by higher fuel costs within our supply chain.

Operating expenses as a percentage of net sales increased 56 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily due to increased depreciation expense related to our continued capital investments, higher associate healthcare benefit costs related to increased enrollment and medical cost inflation, as well as business reorganization charges.

As a result of the factors discussed above, operating income increased $0.2 billion for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

Membership and other income increased 15.6% and 30.4% for the three and six months ended July 31, 2026, respectively, primarily driven by double-digit percentage growth in membership fee revenue from Walmart+.

Growth during the six months ended July 31, 2026 also reflects increases in certain miscellaneous items.

Gross profit rate increased 158 and 95 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily driven by tariff refunds, partially offset by price investments and higher fuel costs within our supply chain.

Gross profit rate also benefited from continued growth in higher margin businesses, including advertising.

Operating expenses as a percentage of net sales increased 72 and 64 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increase for the three months ended July 31, 2026 was primarily driven by higher self-insured general liability claims expense, increased depreciation related to our capital investments and higher associate healthcare benefit costs related to increased enrollment and medical cost inflation.

The increase for the six months ended July 31, 2026 was primarily driven by higher associate healthcare benefit costs, increased depreciation related to our capital investments and higher self-insured general liability claims expense.

As a result of the factors discussed above, operating income increased $1.4 billion and $1.6 billion for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

Walmart International Segment

Three Months Ended April 30,

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

(Dollar amounts and retail square feet in millions) 2026 2025 2026 2025

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Retail square feet at period end 278 274 278 274

Net sales for the Walmart International segment increased $5.4 billion or 18.0% for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily due to positive comparable sales across our international markets, including strong eCommerce growth of $2.0 billion, and positive fluctuations in currency exchange rates of $2.3 billion.

Gross profit rate was flat for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The rate benefitted from improved eCommerce margins and business mix shifts, offset by ongoing format mix shifts.

Operating expenses as a percentage of net sales decreased 28 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year, primarily due to disciplined cost controls and ongoing format mix shifts, partially offset by investments in strategic growth priorities in our Canada and Mexico markets.

As a result of the factors discussed above, operating income increased $0.3 billion for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

Net sales for the Walmart International segment increased $4.0 billion or 12.8% and $9.4 billion or 15.3% for the three and six months ended July 31, 2026, 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 strong eCommerce growth of $1.6 billion and $3.6 billion for the three and six months ended July 31, 2026, respectively.

Currency exchange rate fluctuations positively contributed $1.5 billion and $3.9 billion for the three and six months ended July 31, 2026, respectively.

Gross profit rate decreased 15 and 8 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The decreases were primarily due to price investments and ongoing format mix shifts, partially offset by improved eCommerce margins and business mix shifts.

Additionally for the three months ended July 31, 2026, the rate was negatively impacted by a discrete sales-related reserve.

Operating expenses as a percentage of net sales decreased 29 basis points for both the three and six months ended July 31, 2026, when compared to the same periods in the previous fiscal year.

The decreases were primarily due to disciplined cost controls and ongoing format mix shifts, partially offset by investments in strategic growth priorities in our Mexico and Canada markets.

As a result of the factors discussed above, operating income increased $0.2 billion and $0.5 billion for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

Sam's Club U.S.

Three Months Ended April 30,

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

(Dollar amounts and retail square feet in millions) 2026 2025 2026 2025

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

segment increased $1.3 billion or 6.1% for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily due to comparable sales, including fuel, of 5.9% for the three months ended April 30, 2026, with growth in transactions and unit volumes, reflecting strength in grocery

and general merchandise.

Additionally, higher fuel sales, driven by higher fuel prices and volumes, positively impacted comparable sales by 2.1% for three months ended April 30, 2026.

segment increased $2.1 billion or 8.8% and $3.4 billion or 7.5% for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to comparable sales, including fuel, of 8.6% and 7.3% for the three and six months ended July 31, 2026, respectively, with growth in transactions and unit volumes, reflecting strength in grocery and general merchandise.

Additionally, higher fuel sales, driven by higher fuel prices and volumes, positively impacted comparable sales by 4.2% and 3.2% for the three and six months ended July 31, 2026, respectively.

Sam's Club U.S.

eCommerce net sales positively contributed approximately 3.1% to comparable sales for the three months ended April 30, 2026, reflecting continued strength in member engagement with omnichannel offerings, such as club-fulfilled delivery.

Membership and other income increased 11.0% for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily due to growth in the membership base and Plus penetration, as well as increases in certain miscellaneous income items.

Effective May 1, 2026, Sam's Club U.S.

increased its annual membership fees for Club and Plus memberships from $50 to $60 and from $110 to $120, respectively.

The fee increase will benefit membership and other income in future periods, as membership fees are deferred and recognized ratably over the one-year membership term.

Gross profit rate decreased 26 basis points for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The decrease was primarily due to increased eCommerce fulfillment costs, driven by club-fulfilled delivery.

Operating expenses as a percentage of net sales was flat for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The rate benefitted from higher fuel sales, offset by increased costs related to club-fulfillment of delivery orders and higher associate healthcare benefit costs related to increased enrollment and medical cost inflation.

As a result of the factors discussed above, operating income increased slightly for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

eCommerce net sales positively contributed approximately 3.1% to comparable sales for both the three and six months ended July 31, 2026, reflecting continued strength in member engagement with omnichannel offerings, such as club-fulfilled delivery.

Membership and other income increased 6.0% and 8.5% for the three and six months ended July 31, 2026, 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.

Growth during the six months ended July 31, 2026 also reflects increases in certain miscellaneous items.

As previously reported, Sam's Club U.S.

increased its annual membership fees, effective May 1, 2026.

Membership fees are deferred and recognized ratably over the one-year membership term.

Gross profit rate increased 45 and 11 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The increases were primarily due to tariff refunds, partially offset by price investments and increased eCommerce shipping and fulfillment costs, driven by club-fulfilled delivery.

Operating expenses as a percentage of net sales decreased 26 and 13 basis points for the three and six months ended July 31, 2026, respectively, when compared to the same periods in the previous fiscal year.

The decreases for both the three and six months ended July 31, 2026 were primarily driven by higher fuel sales, offset by continued technology investments and higher self-insured general liability claims expense.

As a result of the factors discussed above, operating income increased $0.2 billion for both the three and six months ended July 31, 2026, when compared to the same periods in the previous fiscal year.

Liquidity and Capital Resources

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Net Cash Provided by Operating Activities

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2026 2025

Net cash provided by operating activities $ 19,710 $ 18,352

Net cash provided by operating activities for the three months ended April 30, 2026 decreased $0.7 billion when compared to the same period in the previous fiscal year.

The decrease was primarily due to timing of inventory receipts, partially offset by timing of certain payments and an increase in cash provided by operating income.

Net cash provided by operating activities for the six months ended July 31, 2026 increased $1.4 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to an increase in cash provided by operating income, partially offset by timing of inventory receipts.

Cash Equivalents and Working Capital Deficit

Cash and cash equivalents were $10.7 billion and $9.3 billion at April 30, 2026 and 2025, respectively.

Our working capital deficit was $26.2 billion as of April 30, 2026, which increased when compared to the $22.7 billion working capital deficit as of April 30, 2025.

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 inventories and receivables primarily related to sales growth combined with higher cash balances.

Cash and cash equivalents were $11.5 billion and $9.4 billion at July 31, 2026 and 2025, respectively.

Our working capital deficit was $26.9 billion as of July 31, 2026, which increased when compared to the $21.5 billion working capital deficit as of July 31, 2025.

The increase in our working capital deficit was primarily driven by an increase in short-term borrowings for general corporate purposes as well as the timing of certain payments described above, partially offset by timing of inventory receipts, increase in receivables related to sales growth and 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 cash dividends and share repurchases.

As of April 30, 2026 and January 31, 2026, cash and cash equivalents of $5.0 billion and $3.9 billion, respectively, may not be freely transferable to the U.S.

As of July 31, 2026 and January 31, 2026, cash and cash equivalents of $5.0 billion and $3.9 billion, respectively, may not be freely transferable to the U.S.

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

Net Cash Used in Investing Activities

Three Months Ended April 30,

Six Months Ended July 31,

(Amounts in millions) 2026 2025

Net cash used in investing activities $ (14,264) $ (11,199)

Net cash used in investing activities for the three months ended April 30, 2026 increased $1.6 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to increased payments for property and equipment.

Net Cash Provided by Financing Activities

Three Months Ended April 30,

Net cash used in investing activities for the six months ended July 31, 2026 increased $3.1 billion when compared to the same period in the previous fiscal year.

The increase was primarily due to increased payments for property and equipment and change in net proceeds received from sales of certain strategic investments in the previous fiscal year.

Net Cash Used in Financing Activities

Six Months Ended July 31,

(Amounts in millions) 2026 2025

Net cash provided by financing activities $ 2,328 $ 8

Net cash provided by financing activities increased $2.3 billion for the three months ended April 30, 2026, when compared to the same period in the previous fiscal year.

The increase was primarily due to lower share repurchases and higher short-term borrowings, primarily offset by debt repayments in the current fiscal year.

Net cash used in financing activities $ (4,842) $ (6,993)

Net cash used in financing activities decreased $2.2 billion for the six months ended July 31, 2026, when compared to the same period in the previous fiscal year.

The decrease was primarily due to higher short-term borrowings and lower share repurchases, primarily offset by increased debt repayments in the current fiscal year.

In April 2026, the Company renewed and extended its existing 364-day revolving credit facility of $10.0 billion as well as its five-year credit facility of $5.0 billion.

In total, we had committed lines of credit in the U.S.

of $15.0 billion at April 30, 2026, all undrawn.

of $15.0 billion at July 31, 2026, all undrawn.

Long-term Debt

The following table provides the changes in our long-term debt for the three months ended April 30, 2026:

The following table provides the changes in our long-term debt for the six months ended July 31, 2026:

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

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(18) (143) (161)

Balances as of April 30, 2026 $ 3,896 $ 36,887 $ 40,783

Balances as of July 31, 2026 $ 3,470 $ 36,462 $ 39,932

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

During the three months ended April 30, 2026, our total outstanding long-term debt increased $2.6 billion, primarily due to the issuance of new long-term debt in April 2026, less current year debt repayments.

During the six months ended July 31, 2026, our total outstanding long-term debt increased $1.8 billion, primarily due to the issuance of new long-term debt in April 2026, less current year debt repayments.

Refer to Note 3 to our Condensed Consolidated Financial Statements for details.

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From time to time, the Company repurchases shares of its common stock under share repurchase programs authorized by the Company's Board of Directors.

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

All repurchases made during the three months ended April 30, 2026 prior to February 23, 2026 were made under the program in effect at the beginning of fiscal 2027.

All repurchases made during the six months ended July 31, 2026 prior to February 23, 2026 were made under the program in effect at the beginning of fiscal 2027.

In February 2026, the Company approved a new $30 billion share repurchase program, which beginning on February 23, 2026, replaced the previous share repurchase program.

As of April 30, 2026, authorization for $28.2 billion of share repurchases remained under the current share repurchase program.

As of July 31, 2026, authorization for $25.1 billion of share repurchases remained under the current share repurchase program.

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

We regularly review share repurchase activity and consider several factors in determining when to execute share repurchases, including, among other things, current cash needs, capacity for leverage, cost of borrowings, our results of operations and the market price of our common stock.

We anticipate that a majority of the ongoing share repurchase program will be funded through the Company's free cash flow.

The following table provides, on a settlement date basis, share repurchase information for the three months ended April 30, 2026 and 2025:

Three Months Ended April 30,

The following table provides, on a settlement date basis, share repurchase information for the six months ended July 31, 2026 and 2025:

Six Months Ended July 31,

(Amounts in millions, except per share data) 2026 2025

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Total amount paid for share repurchases $ 5,104 $ 6,200

During the three months ended April 30, 2026, the Company repurchased $2.1 billion in shares of its common stock, a decrease of $2.5 billion as compared to the same period in the previous fiscal year.

During the six months ended July 31, 2026, the Company repurchased $5.1 billion in shares of its common stock, a decrease of $1.1 billion as compared to the same period in the previous fiscal year.

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

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We have strong commercial paper and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due at favorable rates in capital markets.

As of April 30, 2026, the ratings assigned to our commercial paper and rated series of our outstanding long-term debt were as follows:

As of July 31, 2026, 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

16 unchanged sentences

" In Note 5 , 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 5 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.

In Note 5 we also discuss show cause notices 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 and False Claims Act Litigation;

10 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