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wmt:segment iso4217:USD xbrli:shares xbrli:shares xbrli:pure
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended April 30, 2020.
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from              to             .
Commission File Number 001-6991
image2a22.jpg
WALMART INC.
(Exact name of registrant as specified in its charter)
Delaware
 
71-0415188
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
702 S.W. 8th Street
 
72716
Bentonville
AR
 
(Address of principal executive offices)
 
(Zip Code)

Registrant's telephone number, including area code: (479) 273-4000
Former name, former address and former fiscal year, if changed since last report: N/A
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.10 per share
 
 WMT
 
New York Stock Exchange
1.900% Notes Due 2022
 
WMT22
 
New York Stock Exchange
2.550% Notes Due 2026
 
WMT26
 
New York Stock Exchange
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
 
  
Accelerated Filer
 
Non-Accelerated Filer
 
  
Smaller Reporting Company
 
 
 
 
 
Emerging Growth Company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
The registrant had 2,831,953,450 shares of common stock outstanding as of June 1, 2020.


Table of Contents

Walmart Inc.
Form 10-Q
For the Quarterly Period Ended April 30, 2020



Table of Contents
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



2


Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Walmart Inc.
Condensed Consolidated Statements of Income
(Unaudited)
 
Three Months Ended April 30,
(Amounts in millions, except per share data)
2020
 
2019
Revenues:
 
 
 
Net sales
$
133,672

 
$
122,949

Membership and other income
950

 
976

Total revenues
134,622

 
123,925

Costs and expenses:
 
 
 
Cost of sales
102,026

 
93,034

Operating, selling, general and administrative expenses
27,372

 
25,946

Operating income
5,224

 
4,945

Interest:
 
 
 
Debt
510

 
588

Finance lease
82

 
85

Interest income
(43
)
 
(48
)
Interest, net
549

 
625

Other (gains) and losses
(721
)
 
(837
)
Income before income taxes
5,396

 
5,157

Provision for income taxes
1,322

 
1,251

Consolidated net income
4,074

 
3,906

Consolidated net income attributable to noncontrolling interest
(84
)
 
(64
)
Consolidated net income attributable to Walmart
$
3,990

 
$
3,842

 
 
 
 
Net income per common share:
 
 
 
Basic net income per common share attributable to Walmart
$
1.41

 
$
1.34

Diluted net income per common share attributable to Walmart
1.40

 
1.33

 
 
 
 
Weighted-average common shares outstanding:
 
 
 
Basic
2,831

 
2,869

Diluted
2,849

 
2,886

 
 
 
 
Dividends declared per common share
$
2.16

 
$
2.12

See accompanying notes.

3


Table of Contents

Walmart Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended April 30,
(Amounts in millions)
2020
 
2019
Consolidated net income
$
4,074

 
$
3,906

Consolidated net income attributable to noncontrolling interest
(84
)
 
(64
)
Consolidated net income attributable to Walmart
3,990

 
3,842

 
 
 
 
Other comprehensive income (loss), net of income taxes
 
 
 
Currency translation and other
(3,968
)
 
507

Net investment hedges
157

 
108

Cash flow hedges
(279
)
 
(131
)
Minimum pension liability
15

 
1

Other comprehensive income (loss), net of income taxes
(4,075
)
 
485

Other comprehensive (income) loss attributable to noncontrolling interest
712

 
(34
)
Other comprehensive income (loss) attributable to Walmart
(3,363
)
 
451

 
 
 
 
Comprehensive income (loss), net of income taxes
(1
)
 
4,391

Comprehensive income (loss) attributable to noncontrolling interest
628

 
(98
)
Comprehensive income attributable to Walmart
$
627

 
$
4,293

See accompanying notes.

4


Table of Contents

Walmart Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
 
April 30,
 
January 31,
 
April 30,
(Amounts in millions)
 
2020
 
2020
 
2019
ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
14,930

 
$
9,465

 
$
9,255

Receivables, net
 
5,029

 
6,284

 
5,342

Inventories
 
41,217

 
44,435

 
44,751

Prepaid expenses and other
 
2,152

 
1,622

 
2,391

Total current assets
 
63,328

 
61,806

 
61,739


 
 
 
 
 
 
Property and equipment, net
 
101,872

 
105,208

 
104,604

Operating lease right-of-use assets
 
16,895

 
17,424

 
16,833

Finance lease right-of-use assets, net
 
4,611

 
4,417

 
3,804

Goodwill
 
29,416

 
31,073

 
31,416

Other long-term assets
 
16,770

 
16,567

 
16,148

Total assets
 
$
232,892

 
$
236,495

 
$
234,544

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Short-term borrowings
 
$
4,048

 
$
575

 
$
4,828

Accounts payable
 
44,096

 
46,973

 
45,110

Dividends payable
 
4,588

 

 
4,551

Accrued liabilities
 
20,377

 
22,296

 
21,023

Accrued income taxes
 
1,303

 
280

 
729

Long-term debt due within one year
 
5,983

 
5,362

 
1,464

Operating lease obligations due within one year
 
1,729

 
1,793

 
1,748

Finance lease obligations due within one year
 
523

 
511

 
435

Total current liabilities
 
82,647

 
77,790

 
79,888

 
 
 
 
 
 
 
Long-term debt
 
43,006

 
43,714

 
47,425

Long-term operating lease obligations
 
15,669

 
16,171

 
15,719

Long-term finance lease obligations
 
4,474

 
4,307

 
3,810

Deferred income taxes and other
 
12,986

 
12,961

 
12,792

 
 
 
 
 
 
 
Commitments and contingencies
 

 

 

 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Common stock
 
284

 
284

 
286

Capital in excess of par value
 
2,983

 
3,247

 
2,734

Retained earnings
 
81,141

 
83,943

 
76,276

Accumulated other comprehensive loss
 
(16,168
)
 
(12,805
)
 
(11,091
)
Total Walmart shareholders' equity
 
68,240

 
74,669

 
68,205

Noncontrolling interest
 
5,870

 
6,883

 
6,705

Total equity
 
74,110

 
81,552

 
74,910

Total liabilities and equity
 
$
232,892

 
$
236,495

 
$
234,544

See accompanying notes.

5


Table of Contents

Walmart Inc.
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
Accumulated
 
Total
 
 
 
 
 
 
 
 
 
Capital in
 
 
 
Other
 
Walmart
 
 
 
 
(Amounts in millions)
Common Stock
 
Excess of
 
Retained
 
Comprehensive
 
Shareholders'
 
Noncontrolling
 
Total
Shares
 
Amount
 
Par Value
 
Earnings
 
Loss
 
Equity
 
Interest
 
Equity
Balances as of February 1, 2020
2,832

 
$
284

 
$
3,247

 
$
83,943

 
$
(12,805
)
 
$
74,669

 
$
6,883

 
$
81,552

Consolidated net income

 

 

 
3,990

 

 
3,990

 
84

 
4,074

Other comprehensive loss, net of income taxes

 

 

 

 
(3,363
)
 
(3,363
)
 
(712
)
 
(4,075
)
Dividends declared ($2.16 per share)

 

 

 
(6,117
)
 

 
(6,117
)
 

 
(6,117
)
Purchase of Company stock
(6
)
 
(1
)
 
(26
)
 
(666
)
 

 
(693
)
 

 
(693
)
Dividends declared to noncontrolling interest

 

 

 

 

 

 
(359
)
 
(359
)
Other
6

 
1

 
(238
)
 
(9
)
 

 
(246
)
 
(26
)
 
(272
)
Balances as of April 30, 2020
2,832

 
$
284

 
$
2,983

 
$
81,141

 
$
(16,168
)
 
$
68,240

 
$
5,870

 
$
74,110

 
 
 
 
 
 
 
 
 
Accumulated
 
Total
 
 
 
 
 
 
 
 
 
Capital in
 
 
 
Other
 
Walmart
 
 
 
 
(Amounts in millions)
Common Stock
 
Excess of
 
Retained
 
Comprehensive
 
Shareholders'
 
Noncontrolling
 
Total
Shares
 
Amount
 
Par Value
 
Earnings
 
Loss
 
Equity
 
Interest
 
Equity
Balances as of February 1, 2019
2,878

 
$
288

 
$
2,965

 
$
80,785

 
$
(11,542
)
 
$
72,496

 
$
7,138

 
$
79,634

Adoption of new accounting standards on February 1, 2019, net of income taxes

 

 

 
(266
)
 

 
(266
)
 
(34
)
 
(300
)
Consolidated net income

 

 

 
3,842

 

 
3,842

 
64

 
3,906

Other comprehensive income, net of income taxes

 

 

 

 
451

 
451

 
34

 
485

Dividends declared ($2.12 per share)

 

 

 
(6,071
)
 

 
(6,071
)
 

 
(6,071
)
Purchase of Company stock
(21
)
 
(2
)
 
(73
)
 
(2,012
)
 

 
(2,087
)
 

 
(2,087
)
Dividends declared to noncontrolling interest

 

 

 

 

 

 
(481
)
 
(481
)
Other
5

 

 
(158
)
 
(2
)
 

 
(160
)
 
(16
)
 
(176
)
Balances as of April 30, 2019
2,862

 
$
286

 
$
2,734

 
$
76,276

 
$
(11,091
)
 
$
68,205

 
$
6,705

 
$
74,910

See accompanying notes.











6


Table of Contents

Walmart Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
 
Three Months Ended April 30,
(Amounts in millions)
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Consolidated net income
 
$
4,074

 
$
3,906

Adjustments to reconcile consolidated net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
2,791

 
2,714

Unrealized (gains) and losses
 
(783
)
 
(783
)
Deferred income taxes
 
84

 
124

Other operating activities
 
(51
)
 
75

Changes in certain assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
 
Receivables, net
 
924

 
970

Inventories
 
2,221

 
(421
)
Accounts payable
 
(1,183
)
 
(1,854
)
Accrued liabilities
 
(2,109
)
 
(1,514
)
Accrued income taxes
 
1,049

 
346

Net cash provided by operating activities
 
7,017

 
3,563

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Payments for property and equipment
 
(1,752
)
 
(2,205
)
Proceeds from the disposal of property and equipment
 
60

 
42

Proceeds from the disposal of certain operations
 

 
833

Payments for business acquisitions, net of cash acquired
 
(10
)
 
(56
)
Other investing activities
 
6

 
251

Net cash used in investing activities
 
(1,696
)
 
(1,135
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Net change in short-term borrowings
 
3,542

 
(399
)
Proceeds from issuance of long-term debt
 

 
3,978

Repayments of long-term debt
 

 
(364
)
Dividends paid
 
(1,529
)
 
(1,520
)
Purchase of Company stock
 
(723
)
 
(2,135
)
Dividends paid to noncontrolling interest
 

 
(96
)
Other financing activities
 
(725
)
 
(310
)
Net cash provided by (used in) financing activities
 
565

 
(846
)
 
 
 
 
 
Effect of exchange rates on cash, cash equivalents and restricted cash
 
(415
)
 
(46
)
 
 
 
 
 
Net increase in cash, cash equivalents and restricted cash
 
5,471

 
1,536

Cash, cash equivalents and restricted cash at beginning of year
 
9,514

 
7,756

Cash, cash equivalents and restricted cash at end of period
 
$
14,985

 
$
9,292

See accompanying notes.

7


Table of Contents

Walmart Inc.
Notes to Condensed Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The Condensed Consolidated Financial Statements of Walmart Inc. and its subsidiaries ("Walmart" or the "Company") and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and do not contain certain information included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020 ("fiscal 2020"). Therefore, the interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K.
The Company's Consolidated Financial Statements are based on a fiscal year ending January 31 for the United States ("U.S.") and Canadian operations. The Company consolidates all other operations generally using a one-month lag and based on a calendar year. There were no significant intervening events during the month of April related to the operations consolidated using a lag that materially affected the Condensed Consolidated Financial Statements.
The Company's business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as weather patterns. Historically, the Company's highest sales volume and operating income have occurred in the fiscal quarter ending January 31.
Use of Estimates
The Consolidated Financial Statements have been prepared in conformity with GAAP. Those principles require management to make estimates and assumptions, including potential impacts arising from the COVID-19 pandemic and related government actions, that affect the reported amounts of assets and liabilities. Management's estimates and assumptions also affect the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates.
Receivables
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments–Credit Losses (Topic 326), which modifies the measurement of expected credit losses of certain financial instruments. The Company adopted this ASU on February 1, 2020 with no material impact to the Company's Condensed Consolidated Financial Statements.
Receivables are stated at their carrying values, net of a reserve for credit losses, and are primarily due from the following: customers, which also includes insurance companies resulting from pharmacy sales, banks for customer credit, debit cards and electronic transfer transactions that take in excess of seven days to process; suppliers for marketing or incentive programs; governments for income taxes; and real estate transactions.


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Table of Contents

Note 2. Net Income Per Common Share
Basic net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period. Diluted net income per common share attributable to Walmart is based on the weighted-average common shares outstanding during the relevant period adjusted for the dilutive effect of share-based awards. The Company did not have significant share-based awards outstanding that were anti-dilutive and not included in the calculation of diluted net income per common share attributable to Walmart for the three months ended April 30, 2020 and 2019.
The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share attributable to Walmart:
 
 
Three Months Ended April 30,
(Amounts in millions, except per share data)
 
2020
 
2019
Numerator
 
 
 
 
Consolidated net income
 
$
4,074

 
$
3,906

Consolidated net income attributable to noncontrolling interest
 
(84
)
 
(64
)
Consolidated net income attributable to Walmart
 
$
3,990

 
$
3,842

 
 
 
 
 
Denominator
 
 
 
 
Weighted-average common shares outstanding, basic
 
2,831

 
2,869

Dilutive impact of share-based awards
 
18

 
17

Weighted-average common shares outstanding, diluted
 
2,849

 
2,886

 
 
 
 
 
Net income per common share attributable to Walmart
 
 
 
 
Basic
 
$
1.41

 
$
1.34

Diluted
 
1.40

 
1.33


Note 3. Accumulated Other Comprehensive Loss
The following table provides the changes in the composition of total accumulated other comprehensive loss for the three months ended April 30, 2020:
(Amounts in millions and net of immaterial income taxes)
 
Currency 
Translation and Other
 
Net Investment Hedges
 
Cash Flow Hedges
 
Minimum
Pension 
Liability
 
Total
Balances as of February 1, 2020
 
$
(11,827
)
 
$
1,517

 
$
(539
)
 
$
(1,956
)
 
$
(12,805
)
Other comprehensive income (loss) before reclassifications, net
 
(3,256
)
 
157

 
(295
)
 
(4
)
 
(3,398
)
Reclassifications to income, net
 

 

 
16

 
19

 
35

Balances as of April 30, 2020
 
$
(15,083
)
 
$
1,674

 
$
(818
)
 
$
(1,941
)
 
$
(16,168
)
The following table provides the changes in the composition of total accumulated other comprehensive loss for the three months ended April 30, 2019:
(Amounts in millions and net of immaterial income taxes)
 
Currency 
Translation and Other
 
Net Investment Hedges
 
Cash Flow Hedges
 
Minimum
Pension 
Liability
 
Total
Balances as of February 1, 2019
 
$
(12,085
)
 
$
1,395

 
$
(140
)
 
$
(712
)
 
$
(11,542
)
Other comprehensive income (loss) before reclassifications, net
 
496

 
108

 
(145
)
 
(7
)
 
452

Reclassifications to income, net
 
(23
)
 

 
14

 
8

 
(1
)
Balances as of April 30, 2019
 
$
(11,612
)
 
$
1,503

 
$
(271
)
 
$
(711
)
 
$
(11,091
)
Amounts reclassified from accumulated other comprehensive loss to net income for derivative instruments are recorded in interest, net, in the Company's Condensed Consolidated Statements of Income. Amounts reclassified from accumulated other comprehensive loss to net income for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business, are recorded in other gains and losses in the Company's Condensed Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant.

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Table of Contents

Note 4. Short-term Borrowings and Long-term Debt
The Company has various committed lines of credit in the U.S. that are used to support its commercial paper program. In April 2020, the Company renewed and extended its existing 364-day revolving credit facility of $10.0 billion. In total, the Company had committed lines of credit in the U.S. of $15.0 billion at April 30, 2020 and January 31, 2020, all undrawn.
The following table provides the changes in the Company's long-term debt for the three months ended April 30, 2020:
(Amounts in millions)
 
Long-term debt due within one year
 
Long-term debt
 
Total
Balances as of February 1, 2020
 
$
5,362


$
43,714


$
49,076

Proceeds from issuance of long-term debt
 





Repayments of long-term debt
 





Reclassifications of long-term debt
 
622


(622
)


Other
 
(1
)

(86
)

(87
)
Balances as of April 30, 2020
 
$
5,983


$
43,006


$
48,989


Note 5. Fair Value Measurements
Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
Level 1: observable inputs such as quoted prices in active markets;
Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
The Company measures the fair value of equity investments (primarily its investment in JD.com) on a recurring basis and records them in other long-term assets in the accompanying Condensed Consolidated Balance Sheets. The fair value of the Company's investment in JD.com is as follows:
(Amounts in millions)
 
Fair Value as of April 30, 2020
 
Fair Value as of January 31, 2020
Investment in JD.com measured using Level 1 inputs
 
$
3,105

 
$
2,715

Investment in JD.com measured using Level 2 inputs
 
3,115

 
2,723

Total
 
$
6,220

 
$
5,438


Derivatives
The Company also has derivatives recorded at fair value. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of April 30, 2020 and January 31, 2020, the notional amounts and fair values of these derivatives were as follows:
 
April 30, 2020
 
January 31, 2020
 
(Amounts in millions)
Notional Amount
 
Fair Value
 
Notional Amount
 
Fair Value
 
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges
$
4,000

 
$
201

(1) 
$
4,000

 
$
97

(1) 
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges
3,750

 
593

(1) 
3,750

 
455

(1) 
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges
3,966

 
(1,155
)
(2) 
4,067

 
(696
)
(2) 
Total
$
11,716

 
$
(361
)
 
$
11,817

 
$
(144
)
 

(1) 
Classified in Other long-term assets within the Company's Condensed Consolidated Balance Sheets.
(2) 
Classified in Deferred income taxes and other within the Company's Condensed Consolidated Balance Sheets.
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company did not have any material assets or liabilities subject to nonrecurring fair value measurements as of April 30, 2020.
Other Fair Value Disclosures
The Company records cash and cash equivalents, restricted cash, and short-term borrowings at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities.

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Table of Contents

The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of April 30, 2020 and January 31, 2020, are as follows: 
 
 
April 30, 2020
 
January 31, 2020
(Amounts in millions)
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Long-term debt, including amounts due within one year
 
$
48,989

 
$
58,437

 
$
49,076

 
$
57,769


Note 6. Contingencies
Legal Proceedings
The Company is involved in a number of legal proceedings. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the Company's Condensed Consolidated Financial Statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. However, where a liability is reasonably possible and may be material, such matters have been disclosed. The Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders.
Unless stated otherwise, the matters discussed below, if decided adversely or settled by the Company, individually or in the aggregate, may result in a liability material to the Company's financial condition, results of operations or cash flows.
ASDA Equal Value Claims
ASDA Stores Ltd. ("Asda"), a wholly-owned subsidiary of the Company, is a defendant in over 35,000 equal value ("Equal Value") claims that began in 2008 and are proceeding before an Employment Tribunal in Manchester (the "Employment Tribunal") in the United Kingdom ("UK") on behalf of current and former Asda store employees, and further claims may be asserted in the future. The claimants allege that the work performed by employees in Asda's retail stores is of equal value in terms of, among other things, the demands of their jobs compared to that of employees working in Asda's warehouse and distribution facilities, and that the difference in pay between these job positions disparately impacts women because more women work in retail stores while more men work in warehouses and distribution facilities, and that the pay difference is not objectively justified. The claimants are requesting differential back pay based on higher wage rates in the warehouse and distribution facilities and higher wage rates on a prospective basis.
In October 2016, following a preliminary hearing, the Employment Tribunal ruled that claimants could compare their positions in Asda's retail stores with those of employees in Asda's warehouse and distribution facilities. Asda appealed the ruling and the appeal is scheduled to be heard by the Supreme Court of the United Kingdom beginning on July 14, 2020.
Notwithstanding the appeal, claimants are proceeding in the next phase of their claims. That phase will determine whether the work performed by the claimants is of equal value to the work performed by employees in Asda's warehouse and distribution facilities.
At present, the Company cannot predict the number of such claims that may be filed, and cannot reasonably estimate any loss or range of loss that may arise from these proceedings. Accordingly, the Company can provide no assurance as to the scope and outcomes of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected. The Company believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously.
Prescription Opiate Litigation and Other Matters
In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated numerous lawsuits filed against a wide array of defendants by various plaintiffs, including counties, cities, healthcare providers, Native American tribes, individuals, and third-party payors, asserting claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation entitled In re National Prescription Opiate Litigation (MDL No. 2804), is pending in the U.S. District Court for the Northern District of Ohio. The Company is named as a defendant in some of the cases included in this multidistrict litigation. Similar cases that name the Company have also been filed in state courts by state, local and tribal governments, health care providers and other plaintiffs. Plaintiffs are seeking compensatory and punitive damages, as well as injunctive relief including abatement.  The Company cannot predict the number of such claims that may be filed, but believes it has substantial factual and legal defenses to these claims, and intends to defend the claims vigorously. The Company has also been responding to subpoenas, information requests and investigations from governmental entities related to nationwide controlled substance dispensing and distribution practices involving opioids. The Company cannot reasonably estimate any loss or range of loss that may arise from these matters. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial position, results of operations or cash flows will not be materially adversely affected.

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Table of Contents

Note 7. Segments and Disaggregated Revenue
Segments
The Company is engaged in the operation of retail, wholesale and other units, as well as eCommerce websites, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico, and the United Kingdom. The Company's operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. The Company defines its segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. The Company sells similar individual products and services in each of its segments. It is impractical to segregate and identify revenues for each of these individual products and services.
The Walmart U.S. segment includes the Company's mass merchandising concept in the U.S., as well as eCommerce and omni-channel initiatives. The Walmart International segment consists of the Company's operations outside of the U.S., as well as eCommerce and omni-channel initiatives. The Sam's Club segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives. Corporate and support consists of corporate overhead and other items not allocated to any of the Company's segments.
The Company measures the results of its segments using, among other measures, each segment's net sales and operating income, which includes certain corporate overhead allocations. From time to time, the Company revises the measurement of each segment's operating income, including any corporate overhead allocations, as determined by the information regularly reviewed by its CODM. When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the current period's presentation. Beginning with the first quarter in fiscal 2021, the Company revised its definition of eCommerce net sales to include certain pharmacy transactions and, accordingly, revised prior period amounts to maintain comparability.
Net sales by segment are as follows:
 
Three Months Ended April 30,
(Amounts in millions)
2020

2019
Net sales:
 
 
 
Walmart U.S.
$
88,743

 
$
80,344

Walmart International
29,766

 
28,775

Sam's Club
15,163

 
13,830

Net sales
$
133,672

 
$
122,949


Operating income by segment, as well as operating loss for corporate and support, interest, net and other gains and losses are as follows:
 
Three Months Ended April 30,
(Amounts in millions)
2020
 
2019
Operating income (loss):
 
 
 
Walmart U.S.
$
4,302

 
$
4,142

Walmart International
806

 
738

Sam's Club
494

 
451

Corporate and support
(378
)
 
(386
)
Operating income
5,224

 
4,945

Interest, net
549

 
625

Other (gains) and losses
(721
)
 
(837
)
Income before income taxes
$
5,396

 
$
5,157



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Table of Contents

Disaggregated Revenues
In the following tables, segment net sales are disaggregated by either merchandise category or market. From time to time, the Company revises the assignment of net sales of a particular item to a merchandise category. When the assignment changes, previous period amounts are reclassified to be comparable to the current period's presentation.
In addition, net sales related to eCommerce are provided for each segment, which include omni-channel sales, where a customer initiates an order digitally and the order is fulfilled through a store or club.
(Amounts in millions)
Three Months Ended April 30,
Walmart U.S. net sales by merchandise category
2020
 
2019
Grocery
$
52,835

 
$
46,153

General merchandise
25,476

 
24,406

Health and wellness
9,665

 
8,970

Other categories
767

 
815

Total
$
88,743

 
$
80,344


Of Walmart U.S.'s total net sales, approximately $8.3 billion and $4.7 billion related to eCommerce for the three months ended April 30, 2020 and 2019, respectively.
(Amounts in millions)
Three Months Ended April 30,
Walmart International net sales by market
2020
 
2019
Mexico and Central America
$
8,496

 
$
7,837

United Kingdom
7,132

 
7,077

Canada
4,286

 
4,122

China
3,368

 
3,063

Other
6,484

 
6,676

Total
$
29,766

 
$
28,775


Of Walmart International's total net sales, approximately $2.9 billion and $2.5 billion related to eCommerce for the three months ended April 30, 2020 and 2019, respectively.
(Amounts in millions)
Three Months Ended April 30,
Sam’s Club net sales by merchandise category
2020
 
2019
Grocery and consumables
$
10,427

 
$
8,373

Fuel, tobacco and other categories
2,100

 
2,777

Home and apparel
1,074

 
1,178

Health and wellness
901

 
827

Technology, office and entertainment
661

 
675

Total
$
15,163

 
$
13,830


Of Sam's Club's total net sales, approximately $1.0 billion and $0.7 billion related to eCommerce for the three months ended April 30, 2020 and 2019, respectively.


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Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
This discussion, which presents Walmart Inc.'s ("Walmart," the "Company," "our," or "we") results for periods occurring in the fiscal year ending January 31, 2021 ("fiscal 2021") and the fiscal year ended January 31, 2020 ("fiscal 2020"), should be read in conjunction with our Condensed Consolidated Financial Statements as of and for the three months ended April 30, 2020, 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, 2020, 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, 2020.
We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess the Company's performance. Additionally, the discussion provides information about the financial results of each of the three segments of our business to provide a better understanding of how each of those segments and its results of operations affect the financial condition and results of operations of the Company as a whole.
Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, we discuss segment operating income, comparable store and club sales and other measures. Management measures the results of the Company's segments using each segment's operating income, including certain corporate overhead allocations, as well as other measures. From time to time, we revise the measurement of each segment's operating income and other measures as determined by the information regularly reviewed by our chief operating decision maker.
Comparable store and club sales, or comparable sales, is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period from the corresponding prior year period. Walmart's definition of comparable sales includes sales from stores and clubs open for the previous 12 months, including remodels, relocations, expansions and conversions, as well as eCommerce sales. We measure the eCommerce sales impact by including all sales initiated digitally and those initiated through mobile applications, including omni-channel transactions which are fulfilled through our stores and clubs. Sales at a store that has changed in format are excluded from comparable sales when the conversion of that store is accompanied by a relocation or expansion that results in a change in the store's retail square feet of more than five percent. Additionally, sales related to acquisitions are excluded until such acquisitions have been owned for 12 months. Comparable sales are also referred to as "same-store" sales by others within the retail industry. The method of calculating comparable sales varies across the retail industry. As a result, our calculation of comparable sales is not necessarily comparable to similarly titled measures reported by other companies.
In discussing our operating results, the term currency exchange rates refers to the currency exchange rates we use to convert the operating results for countries where the functional currency is not the U.S. dollar into U.S. dollars or for countries experiencing hyperinflation. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior year period’s currency exchange rates. Additionally, no currency exchange rate fluctuations are calculated for non-USD acquisitions until owned for 12 months. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations. Volatility in currency exchange rates may impact the results, including net sales and operating income, of the Company and the Walmart International segment in the future.
Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates.
We operate in the highly competitive omni-channel retail industry in all of the markets we serve. We face strong sales competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets, as well as eCommerce businesses. Many of these competitors are national, regional or international chains or have a national or international omni-channel or eCommerce presence. We compete with a number of companies for attracting and retaining quality employees ("associates"). We, along with other retail companies, are influenced by a number of factors including, but not limited to: catastrophic events and global health epidemics including the recent COVID-19 pandemic, weather, competitive pressures, consumer disposable income, consumer debt levels and buying patterns, consumer credit availability, cost of goods, currency exchange rate fluctuations, customer preferences, deflation, inflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor costs, tax rates, the imposition of tariffs, cybersecurity attacks and unemployment. Further information on the factors that can affect our operating results and on certain risks to our Company and an investment in our securities can be found herein under "Item 5. Other Information."

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Table of Contents

COVID-19 Updates
Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture, become more digital, and make trust a competitive advantage. These areas of focus are fundamental in running our business every day, and even more so now as Walmart plays an important role during the current COVID-19 pandemic.
Supporting our associates. We remain focused on our strategy while also prioritizing the physical safety, financial health and emotional well-being of our associates. In the U.S., we provided extra pay and benefits, including the payment of a special cash bonus to hourly associates in the first quarter of fiscal 2021 and the introduction of a COVID-19 Emergency Leave Policy. In May 2020, we announced a second special cash bonus to be paid in the second quarter of fiscal 2021. We have also done similar things in some of our international markets to support and reward associates.
Serving our customers. From an operational standpoint, we reduced store hours to allow for additional cleaning and sanitizing, posted social-distancing decals, implemented protocols for temperature checks, began metering the number of customers in a store or club at any one time, and installed sneeze guards at pharmacies and checkouts. Stores, clubs, and facilities received masks and gloves, and associates are required to wear face coverings to protect both our associates and our customers. We hired more than 300,000 associates through May 2020 in the U.S., many of whom are temporary. 
Helping others. We increased our giving to community organizations as well as continuing food donations from our stores and distribution centers. We supported tenants in various markets by waiving or discounting rent for in-store tenants during April 2020, which continued through May 2020. We have also made financial support available to our suppliers.
Managing the business and driving our long-term strategy. As we take care of associates, customers and communities, we continue to manage the business and drive our long-term strategy. We are maintaining our everyday low-price discipline and our omni-channel offering continues to resonate with customers around the world who are increasingly seeking convenience.
The COVID-19 pandemic resulted in broad challenges globally in the first quarter of fiscal 2021, including new and varying government regulations, stretching our supply chain, and introducing significant sales volatility as well as channel and mix shifts due to changing consumer habits. Unprecedented demand led to strong growth in net sales, but lower gross margin rates and higher operating expenses during the quarter. For a detailed discussion on results of operations by reportable segment, refer to "Results of Operations" below.
We expect continued uncertainty in our business and the global economy due to the duration and intensity of the COVID–19 pandemic; the length and impact of stay–at–home orders; the scale and duration of economic stimulus; and volatility in employment trends and consumer confidence which will impact our results in the short term.
In the current environment, we believe cash flows from operations, our current cash position and access to capital markets will continue to be sufficient to meet our anticipated operating cash needs, which include funding seasonal buildups in merchandise inventories and funding our capital expenditures, acquisitions, dividend payments and share repurchases. See "Liquidity and Capital Resources" for additional information.

Company Performance Metrics
We are committed to helping customers save money and live better through everyday low prices, supported by everyday low costs.  At times, we adjust our business strategies to maintain and strengthen our competitive positions in the countries in which we operate.  We define our financial framework as:
strong, efficient growth;
consistent operating discipline; and
strategic capital allocation.
As we execute on this financial framework, we believe our returns on capital will improve over time.
The COVID-19 pandemic affected our business resulting in sales volatility within the first quarter and overall net sales growth. As our Company continues to respond to the COVID-19 pandemic, we have prioritized our focus on associate care, including extra pay and benefits as well as masks and gloves; increased cleaning and sanitation measures; customer safety; and new associate hiring. Additionally, we've delayed certain consulting projects and reduced marketing and travel in response to the COVID-19 pandemic.

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Table of Contents

Strong, Efficient Growth
Our objective of prioritizing strong, efficient growth means we will focus on the most productive growth opportunities, increasing comparable store and club sales, accelerating eCommerce sales growth and expansion of omni-channel initiatives while slowing the rate of growth of new stores and clubs. At times, we make strategic investments which are focused on the long-term growth of the Company.
Comparable sales is a metric that indicates the performance of our existing stores and clubs by measuring the change in sales for such stores and clubs, including eCommerce sales, for a particular period over the corresponding period in the previous year. The retail industry generally reports comparable sales using the retail calendar (also known as the 4-5-4 calendar). To be consistent with the retail industry, we provide comparable sales using the retail calendar in our quarterly earnings releases. However, when we discuss our comparable sales below, we are referring to our calendar comparable sales calculated using our fiscal calendar. As our fiscal calendar differs from the retail calendar, our fiscal calendar comparable sales also differ from the retail calendar comparable sales provided in our quarterly earnings releases. Calendar comparable sales, as well as the impact of fuel, for the three months ended April 30, 2020 and 2019, were as follows:
 
Three Months Ended April 30,
 
2020
 
2019
 
2020
 
2019
 
With Fuel
 
Fuel Impact
Walmart U.S.
10.6
%
 
3.3
%
 
(0.2
)%
 
%
Sam's Club
9.6
%
 
1.4
%
 
(3.4
)%
 
0.9
%
Total U.S.
10.5
%
 
3.0
%
 
(0.6
)%
 
0.1
%
Comparable sales in the U.S., including fuel, increased 10.5% for the three months ended April 30, 2020 when compared to the same period in the previous fiscal year. The Walmart U.S. segment had comparable sales growth of 10.6% for the three months ended April 30, 2020 driven by growth in average ticket primarily resulting from unprecedented demand due to the COVID-19 pandemic, partially offset by a decline in transactions as customers consolidated shopping trips. With the shift in purchasing behavior, Walmart U.S. segment's eCommerce sales positively contributed approximately 4.0% to comparable sales for the three months ended April 30, 2020 and was primarily driven from online grocery and walmart.com.
Comparable sales at the Sam's Club segment were 9.6% for the three months ended April 30, 2020. The Sam's Club segment's comparable sales benefited from growth in transactions resulting from the COVID-19 pandemic, partially offset by our decision to remove tobacco from certain club locations and lower fuel sales. The Sam's Club segment's eCommerce sales positively contributed approximately 1.7% to comparable sales for the three months ended April 30, 2020.
Consistent Operating Discipline
We operate with discipline by managing expenses and optimizing the efficiency of how we work and creating an environment in which we have sustainable lowest cost to serve. We invest in technology and process improvements to increase productivity, manage inventory and reduce costs. We measure operating discipline through expense leverage, which we define as net sales growing at a faster rate than operating, selling, general and administrative ("operating") expenses.
 
Three Months Ended April 30,
(Amounts in millions)
2020
 
2019
Net sales
$
133,672

 
$
122,949

Percentage change from comparable period
8.7
%
 
1.1
%
Operating, selling, general and administrative expenses
$
27,372

 
$
25,946

Percentage change from comparable period
5.5
%
 
0.5
%
Operating, selling, general and administrative expenses as a percentage of net sales
20.5
%
 
21.1
%
For the three months ended April 30, 2020 we leveraged operating expenses, decreasing operating expenses as a percentage of net sales by 62 basis points when compared to the same period in the previous fiscal year, respectively. The primary driver of the expense leverage for the three months ended April 30, 2020 was due to our growth in comparable store sales driven by unprecedented demand resulting from the COVID-19 pandemic, which was partially offset by approximately $0.9 billion of incremental expenses to focus on associate care and customer safety during the COVID-19 pandemic which included bonuses, additional cleaning and supplies, emergency leave pay and other similar charges.

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Table of Contents

Strategic Capital Allocation
Our strategy includes improving our customer-facing initiatives in stores and clubs and creating a seamless omni-channel experience for our customers. In recent years, we have allocated more capital to eCommerce, technology, supply chain, and store remodels and less to new store and club openings. We will continue to remain disciplined with our capital spending in light of the COVID-19 pandemic. Total capital expenditures for three months ended April 30, 2020 decreased compared to the prior year; the following table provides additional detail:
(Amounts in millions)
 
Three Months Ended April 30,
Allocation of Capital Expenditures
 
2020
 
2019
eCommerce, technology, supply chain and other
 
$
823

 
$
1,003

Store remodels
 
438

 
595

New stores and clubs, including expansions and relocations
 
23

 
23

Total U.S.
 
1,284

 
1,621

Walmart International
 
468

 
584

Total capital expenditures
 
$
1,752

 
$
2,205


Returns
As we execute our financial framework, we believe our return on capital will improve over time. We measure return on capital with our return on investment and free cash flow metrics. In addition, we provide returns in the form of share repurchases and dividends, which are discussed in the Liquidity and Capital Resources section.
Return on Assets and Return on Investment
We include Return on Assets ("ROA"), the most directly comparable measure based on our financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), and Return on Investment ("ROI") as metrics to assess returns on assets. While ROI is considered a non-GAAP financial measure, management believes ROI is a meaningful metric to share with investors because it helps investors assess how effectively Walmart is deploying its assets. Trends in ROI can fluctuate over time as management balances long-term strategic initiatives with possible short-term impacts. ROA was 6.6% and 4.0% for the trailing twelve months ended April 30, 2020 and 2019, respectively. The increase in ROA was primarily due to the increase in consolidated net income as a result of lapping the $4.5 billion net loss in fiscal 2019 related to the sale of the majority stake in Walmart Brazil and the change in fair value of the investment in JD.com, partially offset by the dilution to operating income related to Flipkart and business restructuring charges recorded in fiscal 2020. ROI was 13.4% and 14.5% for the trailing twelve months ended April 30, 2020 and 2019, respectively. The decrease in ROI was primarily due to the decrease in operating income as a result of the dilution from Flipkart and business restructuring charges recorded in fiscal 2020, as well as the increase in average total assets due to the acquisition of Flipkart.
We define ROI as adjusted operating income (operating income plus interest income, depreciation and amortization, and rent expense) for the trailing 12 months divided by average invested capital during that period. We consider average invested capital to be the average of our beginning and ending total assets, plus average accumulated depreciation and average amortization, less average accounts payable and average accrued liabilities for that period. For the trailing twelve months ended April 30, 2019, lease related assets and associated accumulated amortization are included in the denominator at their carrying amount as of that balance sheet date, rather than averaged, because they are not directly comparable to the prior year calculation which included rent for the trailing 12 months multiplied by a factor of 8. A two-point average was used for leased assets beginning in fiscal 2021, after one full year from the date of adoption of the new lease standard.
Our calculation of ROI is considered a non-GAAP financial measure because we calculate ROI using financial measures that exclude and include amounts that are included and excluded in the most directly comparable GAAP financial measure. For example, we exclude the impact of depreciation and amortization from our reported operating income in calculating the numerator of our calculation of ROI. As mentioned above, we consider ROA to be the financial measure computed in accordance with generally accepted accounting principles most directly comparable to our calculation of ROI. ROI differs from ROA (which is consolidated net income for the period divided by average total assets for the period) because ROI: adjusts operating income to exclude certain expense items and adds interest income; adjusts total assets for the impact of accumulated depreciation and amortization, accounts payable and accrued liabilities to arrive at total invested capital. Because of the adjustments mentioned above, we believe ROI more accurately measures how we are deploying our key assets and is more meaningful to investors than ROA. Although ROI is a standard financial measure, numerous methods exist for calculating a company's ROI. As a result, the method used by management to calculate our ROI may differ from the methods used by other companies to calculate their ROI

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Table of Contents

The calculation of ROA and ROI, along with a reconciliation of ROI to the calculation of ROA, the most comparable GAAP financial measure, is as follows:
 
 
For the Trailing Twelve Months Ending April 30,
(Amounts in millions)
 
2020
 
2019
CALCULATION OF RETURN ON ASSETS
Numerator
 
 
 
 
Consolidated net income
 
$
15,369

 
$
8,809

Denominator
 
 
 
 
Average total assets(1)
 
$
233,718

 
$
219,736

Return on assets (ROA)
 
6.6
%
 
4.0
%
 
 
 
 
 
CALCULATION OF RETURN ON INVESTMENT
Numerator
 
 
 
 
Operating income
 
$
20,847

 
$
21,748

+ Interest income
 
184

 
222

+ Depreciation and amortization
 
11,062

 
10,714

+ Rent
 
2,694

 
2,866

= Adjusted operating income
 
$
34,787

 
$
35,550

 
 
 
 
 
Denominator
 
 
 
 
Average total assets(1),(2)
 
$
233,718

 
$
226,465

+ Average accumulated depreciation and amortization(1), (2)
 
90,970

 
84,960

- Average accounts payable(1)
 
44,603

 
44,861

- Average accrued liabilities(1)
 
20,700

 
20,903

= Average invested capital
 
$
259,385

 
$
245,661

Return on investment (ROI)
 
13.4
%
 
14.5
%
 
 
 
As of April 30,
 
 
2020
 
2019
 
2018
Certain Balance Sheet Data
 
 
 
 
 
 
Total assets
 
$
232,892

 
$
234,544

 
$
204,927

Leased assets, net
 
NP

 
20,637

 
NP

Total assets without leased assets, net
 
NP

 
213,907

 
NP

Accumulated depreciation and amortization
 
94,514

 
87,426

 
84,964

Accumulated amortization on leased assets
 
NP

 
3,085

 
NP

Accumulated depreciation and amortization, without leased assets
 
NP

 
84,341

 
NP

Accounts payable
 
44,096

 
45,110

 
44,612

Accrued liabilities
 
20,377

 
21,023

 
20,782

 
(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 corresponding prior period and dividing by 2. Average total assets as used in ROA includes the average impact of the adoption of ASU 2016-02, Leases (Topic 842).
(2) For the twelve months ended April 30, 2019, as a result of adopting ASU 2016-02, average total assets is based on the average of total assets without leased assets, net plus leased assets, net as of April 30, 2019. Average accumulated depreciation and amortization is based on the average of accumulated depreciation and amortization, without leased assets plus accumulated amortization on leased assets as of April 30, 2019.
NP = Not provided




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Table of Contents

Free Cash Flow
Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate cash from our business operations, is an important financial measure for use in evaluating the Company's financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See Liquidity and Capital Resources for discussions of GAAP metrics including net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities.
We define free cash flow as net cash provided by operating activities in a period minus payments for property and equipment made in that period. We had net cash provided by operating activities of $7.0 billion for the three months ended April 30, 2020, which increased when compared to $3.6 billion for the three months ended April 30, 2019 due to the accelerated timing of inventory sell-through in the current period primarily related to the impacts of COVID-19, as well as the timing of vendor and other payments. We generated free cash flow of $5.3 billion for the three months ended April 30, 2020, which increased when compared to $1.4 billion for the three months ended April 30, 2019 due to the same reasons as the increase in net cash provided by operating activities, as well as $0.5 billion in decreased capital expenditures.
Walmart's definition of free cash flow is limited in that it does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other contractual obligations or payments made for business acquisitions. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our Condensed Consolidated Statements of Cash Flows.
Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by management to calculate our free cash flow may differ from the methods used by other companies to calculate their free cash flow.
The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, which we believe to be the GAAP financial measure most directly comparable to free cash flow, as well as information regarding net cash used in investing activities and net cash used in financing activities.
 
 
Three Months Ended April 30,
(Amounts in millions)
 
2020
 
2019
Net cash provided by operating activities
 
$
7,017

 
$
3,563

Payments for property and equipment
 
(1,752
)
 
(2,205
)
Free cash flow
 
$
5,265

 
$
1,358

 
 
 
 
 
Net cash used in investing activities(1)
 
$
(1,696
)
 
$
(1,135
)
Net cash provided by (used in) financing activities
 
565

 
(846
)
(1) "Net cash used in investing activities" includes payments for property and equipment, which is also included in our computation of free cash flow.

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Table of Contents

Results of Operations
Consolidated Results of Operations
 
Three Months Ended April 30,
(Amounts in millions, except unit counts)
2020
 
2019
Total revenues
$
134,622

 
$
123,925

Percentage change from comparable period
8.6
%
 
1.0
%
Net sales
$
133,672

 
$
122,949

Percentage change from comparable period
8.7
%
 
1.1
%
Total U.S. calendar comparable sales increase
10.5
%
 
3.0
%
Gross profit margin as a percentage of net sales
23.7
%
 
24.3
%
Operating income
$
5,224

 
$
4,945

Operating income as a percentage of net sales
3.9
%
 
4.0
%
Other (gains) and losses
$
(721
)
 
$
(837
)
Consolidated net income
$
4,074

 
$
3,906

Unit counts at period end
11,484

 
11,368

Retail square feet at period end
1,128

 
1,128

Our total revenues, which are mostly comprised of net sales, but also include membership and other income, increased $10.7 billion or 8.6% for the three months ended April 30, 2020, when compared to the same period in the previous fiscal year. The increase in revenue was due to an increase in net sales, which were primarily due to strong positive comparable sales for the Walmart U.S. and Sam's Club segments resulting from unprecedented demand due to the COVID-19 pandemic, along with positive comparable sales in the majority of our International markets, despite operating limitations in some markets due to government regulations and precautionary measures taken as a result of the COVID-19 pandemic. Net sales were also positively affected by an extra day in February 2020 due to a leap year which increased net sales by approximately 1%. These increases were partially offset by a $1.3 billion