Central Community College Walmart Inc Finance Questions

User Generated

xreelfjrrg

Economics

Central Community College

Description

Select a line item and use Variance Trend Analysis to make some initial assessments about how the company is performing.

  • Locate and post a screen shot of a Balance Sheet from the investor relations section of the website from the latest fiscal year for one of the following companies:
    • FedEx
    • Walmart
  • Pick a Balance Sheet line item from the following list:
    • Accounts Receivable
    • Inventory
    • Property, Plant, and Equipment (PP&E)
    • Accounts Payable
    • Long-Term Debt
    • Total Equity
    • Retained Earnings
  • What does this line item measure and why is it important item for Management to understand this number?
  • From the Balance Sheet, identify the Current Year and the Previous Year closing amounts for your line item. Share these using a data table similar to the below:

Jack’s Toy Shop

(In thousands)

2018

2017

Inventory

$336.2

$304.5

  • Answer the following questions:
    • Has the amount for the line item increased or decreased, and by how much (dollar and/or percentage)?
    • Is this a “good” thing or a “bad” thing for this company?
    • What might this mean for the organization?
    • What might management do to improve this line item?
  • You must use the real posted balance sheet for the company you choose. Do not use 3rd party sources to locate the balance sheet. Go under the Investor Relations section of the organization and use the "official" financial statement.
  • You must post a copy of just the "balance sheet" in the discussion.
  • After you have discussed a particular line item, ask yourself, how can I incorporate the "leadership" portion of the grading rubric in my post. What knowledge is out in the world to help explain your discussed line item. If you are discussing "long-term debt," what value you can add. What should business owners be aware of? What calculations can we use to explain this area, and the list goes on?

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Explanation & Answer

please find the attached files

1

Walmart Inc.
Student’s Name
Institutional Affiliation
Instructor’s Name
Course Name and Number
Assignment Due Date

2

Walmart Inc.

Balance sheet line item: total equity
Walmart’s annual total equity measures the amount invested in the company by investors
in exchange for stock and subsequent earnings except the subsequent paid out dividends. The
company top-level management should be aware of total equity as it creates an image of how the
company is leveraging generic business strategies to attract and retain investors. Total equity is
essential for lenders to ascertain if the company has enough invested funds, investors to
understand if the company has sufficient equity and suppliers to know if Walmart has enough
accumulated equity.

3

Walmart
(Amounts in millions)
2020
Total Equity

2019
$81,552

79,634

Questions
The amount increased by $1,918 million (translating to 2.408%) in the last financial year.
An increase in total equity is a good indicator of the growing financial health of Walmart Inc. It
indicates that it is financially stable and has perfected best business strategies of attracting and
retaining customers, prudent use of available resources and assets to meet the set objectives and
generally attained a unique competitive advantage in the highly competitive retail industry.
Improving total equity can be accomplished by increasing the profit margins, fine-tuning asset
turnover, distribution of idle cash, lower taxes, and integration of other best business practices
(NASDAQ, 2015).

4

References
NASDAQ (2015). 5 Ways to Improve Return on Equity. Available at
https://www.google.com/amp/s/www.nasdaq.com/articles/5-ways-improve-return-equity2015-01-21%3famp
Walmart Investors Relations. Available at https://stock.walmart.com/investors/financialinformation/annual-reports-and-proxies/default.aspx


Walmart Inc.

2020 Annual Report

“OUR PEOPLE
MAKE THE DIFFERENCE”
—Sam Walton

KEY HIGHLIGHTS

for

FY 2020

NEXT
DAY
DELIVERY
now available
to 75% of U.S.
population

$11.8
BILLION

in returns to shareholders

$524
BILLION
in revenue

$25 BILLION
in operating cash flow

+6,100

pickup and delivery
locations globally

LAUNCHED
InHome Delivery in three
U.S. cities

~$180
BILLION

annualized Total Payments
Value with PhonePe

LAUNCHED
NextDay Delivery from
Walmart.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

___________________________________________

FORM 10-K
___________________________________________

Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 31, 2020, or
Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 001-6991.
___________________________________________

WALMART INC.

(Exact name of registrant as specified in its charter)
___________________________________________

DE

71-0415188

(State or other jurisdiction of
incorporation or organization)

(IRS Employer Identification No.)

702 S.W. 8th Street
Bentonville, AR

72716

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (479) 273-4000
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
1.900% Notes Due 2022
2.550% Notes Due 2026

WMT
WMT22
WMT26

NYSE
NYSE
NYSE

Securities registered pursuant to Section 12(g) of the Act: None
___________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
Yes
No

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 for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for at least 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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the 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
Non-Accelerated Filer

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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
As of July 31, 2019, the aggregate market value of the voting common stock of the registrant held by non-affiliates of the
registrant, based on the closing sale price of those shares on the New York Stock Exchange reported on July 31, 2019, was
$155,125,468,742. For the purposes of this disclosure only, the registrant has assumed that its directors, executive officers (as
defined in Rule 3b-7 under the Exchange Act) and the beneficial owners of 5% or more of the registrant's outstanding common
stock are the affiliates of the registrant.
The registrant had 2,832,277,220 shares of common stock outstanding as of March 18, 2020.
DOCUMENTS INCORPORATED BY REFERENCE
Document

Parts Into Which Incorporated

Portions of the registrant's Proxy Statement for the Annual
Meeting of Shareholders to be held June 3, 2020 (the "Proxy
Statement")

Part III

Walmart Inc.
Form 10-K
For the Fiscal Year Ended January 31, 2020

Table of Contents
Page
Part I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

7
14
23
24
26
27

Part II
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

28
29
30
44
46
78
78
78

Part III
Item 10
Item 11
Item 12
Item 13
Item 14

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

79
79
79
79
79

Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures

80
82
83

Part IV
Item 15
Item 16

WALMART INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 31, 2020
All references in this Annual Report on Form 10-K, the information incorporated into this Annual Report on Form 10-K by
reference to information in the Proxy Statement of Walmart Inc. for its Annual Shareholders' Meeting to be held on June 3,
2020 and in the exhibits to this Annual Report on Form 10-K to "Walmart Inc.," "Wal-Mart Stores, Inc.," "Walmart," "the
Company," "our Company," "we," "us" and "our" are to the Delaware corporation named "Wal-Mart Stores, Inc." prior to
February 1, 2018 and named "Walmart Inc." commencing on February 1, 2018 and, except where expressly noted otherwise or
the context otherwise requires, that corporation's consolidated subsidiaries.
PART I
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K and other reports, statements, and information that Walmart Inc. (which individually or
together with its subsidiaries, as the context otherwise requires, is referred to as "we," "Walmart" or the "Company") has filed
with or furnished to the Securities and Exchange Commission ("SEC") or may file with or furnish to the SEC in the future, and
prior or future public announcements and presentations that we or our management have made or may make, include or may
include, or incorporate or may incorporate by reference, statements that may be deemed to be "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), that are intended to enjoy
the protection of the safe harbor for forward-looking statements provided by the Act.
Nature of Forward-Looking Statements
Such forward-looking statements are not statements of historical facts, but instead express our estimates or expectations for our
consolidated, or one of our segment's, economic performance or results of operations for future periods or as of future dates or
events or developments that may occur in the future or discuss our plans, objectives or goals. These forward-looking
statements relate to:
• the growth of our business or change in our competitive position in the future or in or over particular periods;
• the amount, number, growth, increase, reduction or decrease in or over certain periods, of or in certain financial items
or measures or operating measures, including our earnings per share, net sales, comparable store and club sales, our
Walmart U.S. operating segment's eCommerce sales, liabilities, expenses of certain categories, expense leverage,
returns, capital and operating investments or expenditures of particular types and new store openings;
• investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
• our increasing investments in eCommerce, technology, supply chain, store remodels and other omni-channel customer
initiatives, such as same day pickup and delivery;
• volatility in currency exchange rates and fuel prices affecting our or one of our segments' results of operations;
• the Company continuing to provide returns to shareholders through share repurchases and dividends, the use of share
repurchase authorization over a certain period or the source of funding of a certain portion of our share repurchases;
• our sources of liquidity, including our cash, continuing to be adequate or sufficient to fund and finance our operations,
expansion activities, dividends and share repurchases, to meet our cash needs and to fund our operations;
• the insignificance of ineffective hedges; and reclassification of amounts related to our derivatives;
• our effective tax rate for certain periods and the realization of certain net deferred tax assets and the effects of
resolutions of tax-related matters;
• the effect of adverse decisions in, or settlement of, litigation or other proceedings or investigations to which we are
subject;
• the effect on the Company's results of operations or financial condition of the Company's adoption of certain new, or
amendments to existing, accounting standards; or
• our commitments, intentions, plans or goals related to the sustainability of our environment and supply chains, the
promotion of economic opportunity or other societal initiatives.
Our forward-looking statements may also include statements of our strategies, plans and objectives for our operations,
including areas of future focus in our operations, and the assumptions underlying any of the forward-looking statements we
make. The forward-looking statements we make can typically be identified by the use therein of words and phrases such as
"aim," "anticipate," "believe," "could be," "could increase," "could occur," "could result," "continue," "estimate," "expansion,"
"expect," "expectation," "expected to be," "focus," "forecast," "goal," "grow," "guidance," "intend," "invest," "is expected,"
"may continue," "may fluctuate," "may grow," "may impact," "may result," "objective," "plan," "priority," "project," "strategy,"
"to be," "we'll," "we will," "will add," "will allow," "will be," "will benefit," "will change," "will come in at," "will continue,"
"will decrease," "will grow," "will have," "will impact," "will include," "will increase," "will open," "will remain," "will result,"
4

"will stay," "will strengthen," "would be," "would decrease" and "would increase," variations of such words or phrases, other
phrases commencing with the word "will" or similar words and phrases denoting anticipated or expected occurrences or results.
Risks Factors and Uncertainties Affecting Our Business
Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, outside of our
control. One, or a combination, of these risks, factors and uncertainties could materially affect any of those matters as to which
we have made forward-looking statements and cause our actual results or an actual event or occurrence to differ materially from
those results or an event or occurrence described in a forward-looking statement. These risks, factors and uncertainties, which
may be global in their effect or affect only some of the markets in which we operate and which may affect us on a consolidated
basis or affect only some of our reportable segments, include, but are not limited to:
Economic Factors
• economic, geo-political, capital markets and business conditions, trends and events around the world and in the
markets in which Walmart operates;
• currency exchange rate fluctuations;
• changes in market rates of interest;
• changes in market levels of wages;
• changes in the size of various markets, including eCommerce markets;
• unemployment levels;
• inflation or deflation, generally and in certain product categories;
• transportation, energy and utility costs;
• commodity prices, including the prices of oil and natural gas;
• consumer confidence, disposable income, credit availability, spending levels, shopping patterns, debt levels, and
demand for certain merchandise;
• trends in consumer shopping habits around the world and in the markets in which Walmart operates;
• consumer enrollment in health and drug insurance programs and such programs' reimbursement rates and drug
formularies; and
• initiatives of competitors, competitors' entry into and expansion in Walmart's markets, and competitive pressures;
Operating Factors
• the amount of Walmart's net sales and operating expenses denominated in U.S. dollar and various foreign currencies;
• the financial performance of Walmart and each of its segments, including the amounts of Walmart's cash flow during
various periods;
• customer transaction and average ticket in Walmart's stores and clubs and on its eCommerce platforms;
• the mix of merchandise Walmart sells and its customers purchase;
• the availability of goods from suppliers and the cost of goods acquired from suppliers;
• the effectiveness of the implementation and operation of Walmart's strategies, plans, programs and initiatives;
• the impact of acquisitions, divestitures, store or club closures and other strategic decisions;
• Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;
• unexpected changes in Walmart's objectives and plans;
• the amount of shrinkage Walmart experiences;
• consumer acceptance of and response to Walmart's stores and clubs, eCommerce platforms, programs, merchandise
offerings and delivery methods;
• Walmart's gross profit margins, including pharmacy margins and margins of other product categories;
• the selling prices of gasoline and diesel fuel;
• disruption of seasonal buying patterns in Walmart's markets;
• disruptions in Walmart's supply chain;
• cybersecurity events affecting Walmart and related costs and impact of any disruption in business;
• Walmart's labor costs, including healthcare and other benefit costs;
• Walmart's casualty and accident-related costs and insurance costs;
• the size of and turnover in Walmart's workforce and the number of associates at various pay levels within that
workforce;
• the availability of necessary personnel to staff Walmart's stores, clubs and other facilities;
• delays in the opening of new, expanded, relocated or remodeled units;
• developments in, and the outcome of, legal and regulatory proceedings and investigations to which Walmart is a party
or is subject, and the liabilities, obligations and expenses, if any, that Walmart may incur in connection therewith;
• changes in the credit ratings assigned to the Company's commercial paper and debt securities by credit rating agencies;
• Walmart's effective tax rate; and
• unanticipated changes in accounting judgments and estimates;
5

Regulatory and Other Factors
• changes in existing tax, labor and other laws and changes in tax rates, including the enactment of laws and the
adoption and interpretation of administrative rules and regulations;
• the imposition of new taxes on imports and new tariffs and changes in existing tariff rates;
• the imposition of new trade restrictions and changes in existing trade restrictions;
• adoption or creation of new, and modification of existing, governmental policies, programs and initiatives in the
markets in which Walmart operates and elsewhere and actions with respect to such policies, programs and initiatives;
• changes in currency control laws;
• changes in the level of public assistance payments;
• one or more prolonged federal government shutdowns;
• the timing and amount of federal income tax refunds;
• natural disasters, changes in climate, catastrophic events and global health epidemics or pandemics such as the recent
coronavirus outbreak; and
• changes in generally accepted accounting principles in the United States.
We typically earn a disproportionate part of our annual operating income in the fourth quarter as a result of seasonal buying
patterns, which patterns are difficult to forecast with certainty and can be affected by many factors.
Other Risk Factors; No Duty to Update
The above list of factors that may affect the estimates and expectations discussed in or implied or contemplated by forwardlooking statements we make or are made on our behalf is not exclusive. We are subject to other risks discussed under "Part I,
Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and Results
of Operations under "Part II, Item 5," and in risks that may be discussed under "Part II, Item 1A. Risk Factors" and "Part I, Item
2. Management's Discussions and Analysis of Financial Condition and Results of Operations" appearing in our Quarterly
Reports on Form 10-Q or may otherwise be disclosed in our Quarterly Reports on Form 10-Q and other reports filed with the
SEC. Investors and other readers are urged to consider all of these risks, uncertainties and other factors carefully in evaluating
our forward-looking statements.
The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our
business and our operating environment and assumptions that we believe to be or will believe to be reasonable when such
forward-looking statements were or are made. As a consequence of the factors described above, the other risks, uncertainties
and factors we disclose below and in the other reports as mentioned above, other risks not known to us at this time, changes in
facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or
implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forwardlooking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein.
We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially
realized, that those results or developments will result in the expected consequences for us or affect us, our business, our
operations or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on
such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the
forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

6

ITEM 1.

BUSINESS

General
Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and
anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to
continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omnichannel offering that saves time for our customers. Each week, we serve over 265 million customers who visit approximately
11,500 stores and numerous eCommerce websites under 56 banners in 27 countries.
Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and
make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which
has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By
leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and
services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every
day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is
our commitment to control expenses so our cost savings can be passed along to our customers.
Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club. Our fiscal year ends
on January 31 for our United States ("U.S.") and Canadian operations. We consolidate all other operations generally using a
one-month lag and on a calendar year basis. Our discussion is as of and for the fiscal years ended January 31, 2020 ("fiscal
2020"), January 31, 2019 ("fiscal 2019") and January 31, 2018 ("fiscal 2018"). During fiscal 2020, we generated total revenues
of $524.0 billion, which primarily comprised net sales of $519.9 billion.
We maintain our principal offices at 702 S.W. 8th Street, Bentonville, Arkansas 72716, USA. Our common stock trades on the
New York Stock Exchange under the symbol "WMT."
The Development of Our Company
Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by our founders began in 1945
when Sam M. Walton opened a franchise Ben Franklin variety store in Newport, Arkansas. In 1946, his brother, James L.
Walton, opened a similar store in Versailles, Missouri. Until 1962, our founders' business was devoted entirely to the operation
of variety stores. In that year, the first Wal-Mart Discount City, which was a discount store, opened in Rogers, Arkansas. In
1983, we opened our first Sam's Club, and in 1988, we opened our first supercenter. In 1998, we opened our first Walmart
Neighborhood Market. In 1991, we began our first international initiative when we entered into a joint venture in Mexico.
Since then, our international presence has expanded and, as of January 31, 2020, our Walmart International segment conducted
business in 26 countries.
In 2000, we began our first eCommerce initiative by creating walmart.com and then later that year, adding samsclub.com.
Since then, our eCommerce presence has continued to grow. In 2007, leveraging our physical stores, walmart.com launched its
Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores. Since 2016, we have
made several eCommerce acquisitions which have enabled us to leverage technology, talent and expertise, as well as incubate
digitally-native brands and expand our assortment on walmart.com and in stores. In fiscal 2017, walmart.com launched free
two-day shipping and we created Store No 8, a technology incubator with a focus to drive eCommerce innovation. Then in
fiscal 2019, we continued to enhance our eCommerce initiatives with the acquisition of a majority stake of Flipkart Private
Limited ("Flipkart"), an Indian-based eCommerce marketplace, with an ecosystem that includes eCommerce platforms of
Flipkart and Myntra as well as PhonePe, a digital transaction platform.
In fiscal 2020, we launched NextDay Delivery to more than 75 percent of the U.S. population, launched Delivery Unlimited
from 1,600 locations in the U.S. and expanded Same Day Pickup to nearly 3,200 locations. Our eCommerce efforts and
innovation have also led to omni-channel offerings in many of our markets including grocery pick up and/or delivery in nearly
a dozen countries outside the U.S. To date, we now have more than 6,100 grocery pick up and delivery locations globally. We
are enhancing our ecosystem with our omni-channel capabilities, stores, services, eCommerce sites, supply chain combined
with our more than 2.2 million associates to better serve our customers. Together, we believe these elements produce a
flywheel effect which creates customer relationships where customers view Walmart as their primary destination.

7

Information About Our Segments
We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S.,
Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. Our operations are
conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. We define our segments as those
operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate
resources. 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 sell
similar individual products and services in each of our segments. It is impracticable to segregate and identify revenues for each
of these individual products and services.
We measure the results of our segments using, among other measures, each segment's net sales and operating income, which
includes certain corporate overhead allocations. From time to time, we revise the measurement of each segment's operating
income, including any corporate overhead allocations, as determined by the information regularly reviewed by our CODM.
When the measurement of a segment changes, previous period amounts and balances are reclassified to be comparable to the
current period's presentation.
Walmart U.S. Segment
Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico.
Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood
Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $341.0 billion for fiscal
2020, representing 66% of our fiscal 2020 consolidated net sales, and had net sales of $331.7 billion and $318.5 billion for
fiscal 2019 and 2018, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a
percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the
Company's net sales and operating income.
Omni-channel. Walmart U.S. provides an omni-channel experience to customers, integrating retail stores and eCommerce,
through services such as "Same Day Pickup," "Same Day Delivery," "Delivery Unlimited," "NextDay Delivery," and "Endless
Aisle." As of January 31, 2020, we had nearly 3,200 grocery pickup locations and over 1,600 delivery locations. We have
several eCommerce websites, the largest of which is walmart.com. We define eCommerce sales as sales initiated online
through our websites or through a mobile app. eCommerce sales may be fulfilled by a number of methods including our
dedicated eCommerce fulfillment centers or our stores. The following table provides the approximate size of our retail stores as
of January 31, 2020:
Minimum
Square Feet
Supercenters (general merchandise and grocery)
Discount stores (general merchandise and limited grocery)
Neighborhood markets(1) (grocery)
(1)

69,000
30,000
28,000

Maximum
Square Feet
260,000
206,000
65,000

Average
Square Feet
178,000
105,000
42,000

Excludes other small formats.

Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below:





Grocery consists of a full line of grocery items, including meat, produce, natural & organics, deli & bakery, dairy,
frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables such as health and
beauty aids, baby products, household chemicals, paper goods and pet supplies;
Health and wellness includes pharmacy, optical services, clinical services, and over-the-counter drugs and other
medical products;
General merchandise includes:
Entertainment (e.g., electronics, cameras and supplies, photo processing services, wireless, movies, music,
video games and books);
Hardlines (e.g., stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture);
Apparel (e.g., apparel for women, girls, men, boys and infants, as well as shoes, jewelry and accessories); and
Home/Seasonal (e.g., home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics
and crafts and seasonal merchandise).

Walmart U.S. recently launched Walmart Media Group, an in-house advertising offering, to work with brands to influence
shoppers. Walmart U.S. also offers fuel and financial services and related products, including money orders, prepaid cards,
money (wire) transfers, check cashing and bill payment. Combined, these offerings total less than 1% of annual net sales.
8

Brand name merchandise represents a significant portion of the merchandise sold in Walmart U.S. We also market lines of
merchandise under our private-label brands, including brands such as: "Allswell," "Athletic Works," "Bonobos," "Equate,"
"EV1," "Everstart," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "No Boundaries," "Onn," "Ozark
Trail," "Parent's Choice," "Scoop," "SwissTech," "Time and Tru" and "Wonder Nation." The Company also markets lines of
merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware" and "Russell."
Periodically, revisions are made to the categorization of the components comprising our strategic merchandise units. When
revisions are made, the previous periods' presentation is adjusted to maintain comparability.
Operations. Many supercenters, discount stores and neighborhood markets are open 24 hours each day. A variety of payment
methods are accepted. Consistent with its strategy, Walmart U.S. continues to develop technology tools that help better serve
customers and be more efficient in stores, such as shelf-scanning robots, autonomous floor scrubbers, and automated unloading
conveyor systems.
Seasonal Aspects of Operations. Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national
and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating
income have occurred in the fiscal quarter ending January 31.
Competition. Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce
retailers. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel
experience largely determines our competitive position within the retail industry. We employ many programs designed to meet
competitive pressures within our industry. These programs include the following:
• EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our
prices will not change under frequent promotional activity;
• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our
customers; and
• Omni-channel offerings such as Same Day Pickup and Same Day Delivery, where a customer places an order online
and picks it up for free from a store or has it delivered; Delivery Unlimited, where a customer can receive unlimited
grocery delivery for an annual fee; as well as free two-day shipping without an annual membership fee and free
NextDay Delivery on an assortment of best-selling items.
Distribution. For fiscal 2020, approximately 79% of Walmart U.S.'s purchases of store merchandise were shipped through our
162 distribution facilities, which are located strategically throughout the U.S. The remaining store merchandise we purchased
was shipped directly from suppliers. General merchandise and dry grocery merchandise is transported primarily through the
segment's private truck fleet; however, we contract with common carriers to transport the majority of our perishable grocery
merchandise. We ship merchandise purchased by customers on our eCommerce platforms by a number of methods from
multiple locations including from our 40 dedicated eCommerce fulfillment centers which includes eight temporary fulfillment
centers.
Walmart International Segment
Walmart International is our second largest segment and operates in 26 countries outside of the U.S. Walmart International
operates through our wholly-owned subsidiaries in Argentina, Canada, Chile, China, India, Japan and the United Kingdom, and
our majority-owned subsidiaries in Africa (which includes Botswana, Ghana, Kenya, Lesotho, Malawi, Mozambique, Namibia,
Nigeria, South Africa, Swaziland, Tanzania, Uganda and Zambia), Central America (which includes Costa Rica, El Salvador,
Guatemala, Honduras and Nicaragua), India and Mexico. Walmart International previously operated in Brazil prior to the sale
of the majority stake of Walmart Brazil in fiscal 2019, as discussed in Note 12 to our Consolidated Financial Statements.
Walmart International includes numerous formats divided into three major categories: retail, wholesale and other. These
categories consist of many formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's
Clubs) and cash & carry, as well as eCommerce through walmart.com.mx, asda.com, walmart.ca, flipkart.com and other sites.
Walmart International had net sales of $120.1 billion for fiscal 2020, representing 23% of our fiscal 2020 consolidated net sales,
and had net sales of $120.8 billion and $118.1 billion for fiscal 2019 and 2018, respectively. The segment's net sales were
negatively impacted by currency exchange rate fluctuations for all years presented. The gross profit rate is lower than that of
Walmart U.S. primarily because of its merchandise mix.

9

Walmart International's strategy is to create strong local businesses powered by Walmart which means being locally relevant
and customer-focused in each of the markets it operates. We are being deliberate about where and how we choose to operate
and continue to re-shape the portfolio to best enable long-term, sustainable and profitable growth. As such, we have taken
certain strategic actions to strengthen our Walmart International portfolio for the long-term, including:


Acquisition of a majority stake of Flipkart in August 2018.



Divestiture of 80 percent of Walmart Brazil to Advent International (“Advent”) in August 2018.



Divestiture of the Walmart Chile banking operations in December 2018 and the divestiture of the Walmart Canada
banking operations in April 2019.

Omni-channel. Walmart International provides an omni-channel experience to customers, integrating retail stores and
eCommerce, such as through services like "Click & Collect" in the United Kingdom, our grocery pick-up and delivery business
in several other markets, our marketplaces, such as Flipkart in India, and a digital transaction platform anchored in payments
such as PhonePe in India.
Generally, retail units' selling area range in size from 1,400 square feet to 186,000 square feet. Our wholesale stores' selling
area generally range in size from 25,000 square feet to 156,000 square feet. As of January 31, 2020, Walmart International had
nearly 3,200 grocery pickup and/or delivery locations across its markets.
Merchandise. The merchandising strategy for Walmart International is similar to that of our operations in the U.S. in terms of
the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of our sales, we
have both leveraged U.S. private brands and developed market specific private brands to serve our customers with high quality,
low priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Marketside" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Cambridge," "Lider," "Myntra," "PhonePe" and "Extra Special." In addition, we have developed
relationships with regional and local suppliers in each market to ensure reliable sources of quality merchandise that is equal to
national brands at low prices.
Operations. The hours of operation for operating units in Walmart International vary by country and by individual markets
within countries, depending upon local and national ordinances governing hours of operation. Operating units in each country
accept a variety of payment methods.
Seasonal Aspects of Operations. Walmart International's business is seasonal to a certain extent. Historically, the segment's
highest sales volume and operating income have occurred in the fourth quarter of our fiscal year. The seasonality of the
business varies by country due to different national and religious holidays, festivals and customs, as well as different weather
patterns.
Competition. Walmart International competes with omni-channel retailers who operate department, drug, discount, variety and
specialty stores, supermarkets, hypermarkets and supercenter-type stores, wholesale clubs, home-improvement stores, specialty
electronics stores, cash & carry operations and convenience stores, and eCommerce retailers, as well as catalog businesses. Our
ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely
determines our competitive position within the retail industry. We believe price leadership is a critical part of our business
model and we continue to focus on moving our markets towards an EDLP approach. Additionally, our ability to operate food
departments effectively has a significant impact on our competitive position in the markets where we operate.
Distribution. We utilize a total of 221 distribution facilities located in Argentina, Canada, Central America, Chile, China,
Japan, Mexico, South Africa, India and the United Kingdom. Certain of these facilities are used to ship merchandise to both
our stores and customers on our eCommerce platforms. Through these facilities, we process and distribute both imported and
domestic products to the operating units of the Walmart International segment. During fiscal 2020, approximately 85% of
Walmart International's purchases passed through these distribution facilities. Suppliers ship the balance of Walmart
International's purchases directly to our stores in the various markets in which we operate. We ship merchandise purchased by
customers on our eCommerce platforms by a number of methods from multiple locations including from our 88 dedicated
eCommerce fulfillment centers, as well as more than 2,500 eCommerce sort centers in India.
Sam's Club Segment
Sam's Club operates in 44 states in the U.S. and in Puerto Rico. Sam's Club is a membership-only warehouse club that also
operates samsclub.com. Sam's Club had net sales of $58.8 billion for fiscal 2020, representing 11% of our consolidated fiscal
2020 net sales, and had net sales of $57.8 billion and $59.2 billion for fiscal 2019 and 2018, respectively. As a membershiponly warehouse club, membership income is a significant component of the segment's operating income. Sam's Club operates
with a lower gross profit rate and lower operating expenses as a percentage of net sales than our other segments.

10

Membership. The following two options are available to members:

Annual Membership Fee
Number of Add-on Memberships ($40 each)
Eligible for Cash Rewards

Plus Membership

Club Membership

$100

$45

Up to 16

Up to 8

Yes

No

All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is
a benefit that provides 2% back on qualifying Sam's Club purchases up to a $500 cash reward annually. The amount earned can
be used for purchases, membership fees or redeemed for cash. Plus Members are also eligible for Free Shipping on the
majority of merchandise, with no minimum order size, and receive discounts on prescriptions and glasses.
Omni-channel. While Sam's Club is a membership-only warehouse club, it provides an omni-channel experience to customers,
integrating retail stores and eCommerce. The warehouse facility sizes generally range between 32,000 and 168,000 square feet,
with an average size of approximately 134,000 square feet.
Members have access to a broad assortment of merchandise, including products not found in our clubs, and services online at
samsclub.com and through our mobile commerce applications, providing services such as "Club Pickup" or the option of
delivery direct-to-home.
Merchandise. Sam's Club offers merchandise in the following five merchandise categories:
• Grocery and consumables includes dairy, meat, bakery, deli, produce, dry, chilled or frozen packaged foods, alcoholic
and nonalcoholic beverages, floral, snack foods, candy, other grocery items, health and beauty aids, paper goods,
laundry and home care, baby care, pet supplies and other consumable items;
• Fuel, tobacco and other categories consists of gasoline stations, tobacco, tools and power equipment, and tire and
battery centers;
• Home and apparel includes home improvement, outdoor living, grills, gardening, furniture, apparel, jewelry,
housewares, toys, seasonal items, mattresses and small appliances;
• Technology, office and entertainment includes electronics, wireless, software, video games, movies, books, music,
office supplies, office furniture, photo processing and third-party gift cards; and
• Health and wellness includes pharmacy, optical and hearing services and over-the-counter drugs.
In addition, the Member's Mark private label brand continues to expand assortment and deliver member value.
Operations. Operating hours for Sam's Clubs are generally Monday through Friday from 10:00 a.m. to 8:30 p.m., Saturday
from 9:00 a.m. to 8:30 p.m. and Sunday from 10:00 a.m. to 6:00 p.m. Additionally, most club locations offer Plus Members the
ability to shop before the regular operating hours Monday through Saturday, starting at 7:00 a.m. A variety of payment methods
are accepted. Consistent with its strategy, Sam's Club continues to develop technology tools to drive a great member
experience in club. For example, Sam's Garage, a new application in its tire and battery business, is leveraging technology in
new ways to provide a personalized and efficient shopping experience. Sam's Club also offers "Scan and Go," a mobile
checkout and payment solution, which allows members to bypass the checkout line.
Seasonal Aspects of Operations. Sam's Club's business is seasonal to a certain extent due to calendar events and national and
religious holidays, as well as different weather patterns. Historically, its highest sales volume has occurred in the fiscal quarter
ending January 31.
Competition. Sam's Club competes with other membership-only warehouse clubs, the largest of which is Costco, as well as
with discount retailers, retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations as well
as omni-channel and eCommerce retailers and catalog businesses. At Sam's Club, we provide value at members-only prices, a
quality merchandise assortment, and bulk sizing to serve both our Plus and Club members. Our eCommerce website and
mobile commerce applications have increasingly become important factors in our ability to compete.
Distribution. During fiscal 2020, approximately 73% of Sam's Club's non-fuel club purchases were shipped from Sam's Club's
25 dedicated distribution facilities, located strategically throughout the U.S., or from some of the Walmart U.S. segment's
distribution facilities, which service the Sam's Club segment for certain items. Suppliers shipped the balance of the Sam's Club
segment's club purchases directly to Sam's Club locations. Sam's Club ships merchandise purchased on samsclub.com and
through its mobile commerce applications by a number of methods including shipments made directly from Clubs, nine
dedicated eCommerce fulfillment centers, two dedicated import facilities and other distribution centers.

11

Sam's Club uses a combination of our private truck fleet, as well as common carriers, to transport non-perishable merchandise
from distribution facilities to clubs. The segment contracts with common carriers to transport perishable grocery merchandise
from distribution facilities to clubs.
Intellectual Property
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary
technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and
others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to
protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain
names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications
covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future,
certain of our proprietary rights to third parties.
Suppliers and Supply Chain
As a retailer and warehouse club operator, we utilize a global supply chain that includes over 100,000 suppliers located around
the world, including in the U.S., from whom we purchase the merchandise that we sell in our stores, clubs and online. In many
instances, we purchase merchandise from producers located near the stores and clubs in which such merchandise will be sold,
particularly products in the "fresh" category. Our purchases may represent a significant percentage of the annual sales for a
number of our suppliers, and the volume of product we acquire from many suppliers allows us to obtain favorable pricing from
such suppliers. Our suppliers are subject to standards of conduct, including requirements that they comply with local labor
laws, local worker safety laws and other applicable laws. Our ability to acquire from our suppliers the assortment and volume
of products we wish to offer to our customer, to receive those products within the required time through our supply chain and to
distribute those products to our stores and clubs determines, in part, our in-stock levels in our stores and clubs and the
attractiveness of our merchandise assortment we offer to our customers and members.
Employees
As of the end of fiscal 2020, Walmart Inc. and our subsidiaries employed more than 2.2 million employees ("associates")
worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the
Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates
are good. A large number of associates turn over each year, although Walmart U.S. turnover has improved in recent years as a
result of our focus on increasing wages and providing improved tools, technology and training to associates.
Certain information relating to retirement-related benefits we provide to our associates is included in Note 11 to our
Consolidated Financial Statements. In addition to retirement-related benefits, in the U.S. we offer a broad range of Companypaid benefits to our associates. These include a store discount card or Sam's Club membership, bonuses based on Company
performance, matching a portion of associate purchases of our stock through our Associate Stock Purchase Plan and life
insurance. In addition to the health-care benefits for eligible full-time and part-time associates in the U.S., we offer maternity
leave and a paid parental leave program to all full-time associates. We also offer a $5,000 benefit to assist eligible associates
with adoption. Additionally, we offer eligible associates tuition assistance towards earning a college degree through "Live
Better U," which allows associates to earn a college degree or certificate for the equivalent of $1 per day. Similarly, in our
operations outside the U.S., we provide a variety of associate benefits that vary based on customary local practices and statutory
requirements.

12

Information About Our Executive Officers
The following chart names the executive officers of the Company as of the date of the filing of this Annual Report on Form 10K with the SEC, each of whom is elected by and serves at the pleasure of the Board of Directors. The business experience
shown for each officer has been his or her principal occupation for at least the past five years, unless otherwise noted.
Current
Position
Held Since

Name

Business Experience

Daniel J. Bartlett

Executive Vice President, Corporate Affairs, effective June 2013. From November
2007 to June 2013, he served as the Chief Executive Officer and President of U.S.
Operations at Hill & Knowlton, Inc., a public relations company.

2013

48

M. Brett Biggs

Executive Vice President and Chief Financial Officer, effective January 2016.
From January 2014 to December 2015, he served as Executive Vice President and
Chief Financial Officer of Walmart International.

2016

51

Rachel Brand

Executive Vice President, Global Governance, Chief Legal Officer and Corporate
Secretary, effective April 2018. From May 2017 to February 2018, she served as
Associate Attorney General in the United States Department of Justice. From
January 2017 to May 2017, Ms. Brand was an Associate Professor of Law at
George Mason University Antonin Scalia Law School. From August 2012 to
February 2017, she served as a Board Member on the Privacy and Civil Liberties
Oversight Board of the U.S. government.

2018

46

David M. Chojnowski

Senior Vice President and Controller effective January 2017. From October 2014
to January 2017, he served as Vice President and Controller, Walmart U.S.

2017

50

John Furner

Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective November 2019. From February 2017 until November 2019, he served
as President and Chief Executive Officer, Sam's Club. From October 2015 to
January 2017, he served as Executive Vice President and Chief Merchandising
Officer of Sam's Club.

2019

45

Suresh Kumar

Executive Vice President, Global Chief Technology Officer and Chief
Development Officer effective July 2019. From February 2018 until June 2019,
Mr. Kumar was Vice President and General Manager at Google LLC. From May
2014 until February 2018, he was Corporate Vice President at Microsoft
Corporation.

2019

55

Marc Lore

Executive Vice President, President and Chief Executive Officer, U.S.
eCommerce, effective September 2016. From April 2014 to September 2016, he
served as President and Chief Executive Officer of Jet.com, Inc.

2016

48

Judith McKenna

Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 2018. From February 2015 to January 2018, she
served as Executive Vice President and Chief Operating Officer of Walmart U.S.

2018

53

Kathryn McLay

Executive Vice President, President and Chief Executive Officer, Sam's Club
effective November 15, 2019. From February 2019 to November 2019, she served
as Executive Vice President, Walmart U.S. Neighborhood Markets. From
December 2015 until February 2019, she served as Senior Vice President, U.S.
Supply Chain. Ms. McLay originally joined the Company in April 2015 as Vice
President of U.S. Finance and Strategy.

2019

46

C. Douglas McMillon

President and Chief Executive Officer, effective February 2014. From February
2009 to January 2014, he served as Executive Vice President, President and Chief
Executive Officer, Walmart International.

2014

53

Donna Morris

Executive Vice President, Global People and Chief People Officer, effective
February 2020. From April 2002 to January 2020, she served at Adobe Inc. in
various roles, including most recently, Chief Human Resources Officer and
Executive Vice President, Employee Experience.

2020

52

13

Age

Our Website and Availability of SEC Reports and Other Information
Our corporate website is located at www.stock.walmart.com. We file with or furnish to the SEC Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy statements and annual
reports to shareholders, and, from time to time, other documents. The reports and other documents filed with or furnished to
the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we
electronically file them with or furnish them to the SEC. The SEC maintains a website that contains reports, proxy and
information statements and other information regarding issuers, such as the Company, that file electronically with the SEC.
The address of that website is www.sec.gov. Our SEC filings, our Code of Ethics for our CEO and senior financial officers and
our Statement of Ethics can be found on our website at www.stock.walmart.com. These documents are available in print to any
shareholder who requests a copy by writing or calling our Investor Relations Department, which is located at our principal
offices.
A description of any substantive amendment or waiver of Walmart's Code of Ethics for the CEO and senior financial officers or
our Statement of Ethics for our chief executive officer, our chief financial officer and our controller, who is our principal
accounting officer, will be disclosed on our website at www.stock.walmart.com under the Corporate Governance section. Any
such description will be located on our website for a period of 12 months following the amendment or waiver.
ITEM 1A.

RISK FACTORS

The risks described below could, in ways we may or may not be able to accurately predict, materially and adversely affect our
business, results of operations, financial condition and liquidity. Our business operations could also be affected by additional
factors that apply to all companies operating in the U.S. and globally. The following risk factors do not identify all risks that we
may face.
Strategic Risks
General or macro-economic factors, both domestically and internationally, may materially adversely affect our financial
performance.
General economic conditions and other economic factors, globally or in one or more of the markets we serve, may adversely
affect our financial performance. Higher interest rates, lower or higher prices of petroleum products, including crude oil,
natural gas, gasoline, and diesel fuel, higher costs for electricity and other energy, weakness in the housing market, inflation,
deflation, increased costs of essential services, such as medical care and utilities, higher levels of unemployment, decreases in
consumer disposable income, unavailability of consumer credit, higher consumer debt levels, changes in consumer spending
and shopping patterns, fluctuations in currency exchange rates, higher tax rates, imposition of new taxes or other changes in tax
laws, changes in healthcare laws, other regulatory changes, the imposition of tariffs or other measures that create barriers to or
increase the costs associated with international trade, overall economic slowdown or recession and other economic factors in
the U.S. or in any of the other markets in which we operate could adversely affect consumer demand for the products we sell in
the U.S. or such other markets, change the mix of products we sell to one with a lower average gross margin, cause a slowdown
in discretionary purchases of goods, adversely affect our net sales and result in slower inventory turnover and greater
markdowns of inventory, or otherwise materially adversely affect our operations and operating results and could result in
impairment charges to intangible assets, goodwill or other long-lived assets.
In addition, the economic factors listed above, any other economic factors or circumstances resulting in higher transportation,
labor, insurance or healthcare costs or commodity prices, and other economic factors in the U.S. and other countries in which
we operate can increase our cost of sales and operating, selling, general and administrative expenses and otherwise materially
adversely affect our operations and operating results.
The economic factors that affect our operations may also adversely affect the operations of our suppliers, which can result in an
increase in the cost to us of the goods we sell to our customers or, in more extreme cases, in certain suppliers not producing
goods in the volume typically available to us for sale.
We face strong competition from other retailers and wholesale club operators which could materially adversely affect
our financial performance.
Each of our segments competes for customers, employees, digital prominence, products and services and in other important
aspects of its business with many other local, regional, national and global eCommerce and omni-channel retailers, wholesale
club operators and retail intermediaries.
We compete in a variety of ways, including the prices at which we sell our merchandise, merchandise selection and availability,
services offered to customers, location, store hours, in-store amenities, the shopping convenience and overall shopping
experience we offer, the attractiveness and ease of use of our digital platforms, cost and speed of and options for delivery to
customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and
digital operations.
14

A failure to respond effectively to competitive pressures and changes in the retail markets or delays or failure in execution of
our strategy could materially adversely affect our financial performance. See "Item 1. Business" above for additional
discussion of the competitive situation of each of our reportable segments.
Certain segments of the retail industry are undergoing consolidation, which could result in increased competition and
significantly alter the dynamics of the retail marketplace. Other segments are substantially reducing operations which could
also result in competition rushing to fill the void created by such corporate actions. Such consolidation, or other business
combinations or alliances, or reduction in operation may result in competitors with greatly improved financial resources,
improved access to merchandise, greater market penetration than they previously enjoyed and other improvements in their
competitive positions. Such business combinations or alliances could result in the provision of a wider variety of products and
services at competitive prices by such consolidated or aligned companies, which could adversely affect our financial
performance.
If we do not timely identify or effectively respond to consumer trends or preferences, it could negatively affect our
relationship with our customers, demand for the products and services we sell, our market share and the growth of our
business.
It is difficult to predict consistently and successfully the products and services our customers will demand and changes in their
shopping patterns. The success of our business depends in part on how accurately we predict consumer demand, availability of
merchandise, the related impact on the demand for existing products and the competitive environment. Price transparency,
assortment of products, customer experience, convenience, ease and the speed and cost of shipping are of primary importance
to customers and continue to increase in importance, particularly as a result of digital tools and social media available to
consumers and the choices available to consumers for purchasing products. Our failure to adequately or effectively respond to
changing consumer tastes, preferences and shopping patterns, or any other failure on our part to timely identify or effectively
respond to changing consumer tastes, preferences and shopping patterns could negatively affect our relationship with our
customers, the demand for the products we sell or services we offer, our market share and the growth of our business.
Failure to successfully execute our omni-channel strategy and the cost of our investments in eCommerce and technology
may materially adversely affect our market position, net sales and financial performance.
The retail business continues to rapidly evolve and consumers increasingly embrace digital shopping. As a result, the portion of
total consumer expenditures with retailers and wholesale clubs occurring through digital platforms is increasing and the pace of
this increase could accelerate.
Our strategy, which includes investments in eCommerce, technology, acquisitions, joint ventures, store remodels and other
customer initiatives may not adequately or effectively allow us to grow our eCommerce business, increase comparable store
sales, maintain or grow our overall market position or otherwise offset the impact on the growth of our business of a moderated
pace of new store and club openings. The success of this strategy will depend in large measure on our ability to continue
building and delivering a seamless omni-channel shopping experience for our customers and is further subject to the related
risks discussed in this Item 1A. Failure to successfully execute this strategy may adversely affect our market position, net sales
and financial performance which could also result in impairment charges to intangible assets or other long-lived assets. In
addition, a greater concentration of eCommerce sales, including increasing online grocery sales, could result in a reduction in
the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for cross-store or cross-club sales of
merchandise that such traffic creates and could reduce our sales within our stores and clubs and materially adversely affect our
financial performance.
Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred, will
adversely impact our financial performance in the short-term and failure to realize the benefits of these investments may
adversely impact our financial performance over the longer term.
The performance of strategic alliances and other business relationships to support the expansion of our business could
materially adversely affect our financial performance.
We may enter into strategic alliances and other business relationships in the countries in which we have existing operations or
in other markets to expand our retail operations. These arrangements may not generate the level of sales we anticipate when
entering into the arrangement or may otherwise adversely impact our business and competitive position relative to the results
we could have achieved in the absence of such alliance. In addition, any investment we make in connection with a strategic
alliance or business relationship could materially adversely affect our financial performance.

15

Operational Risks
Natural disasters, changes in climate, and geo-political events and catastrophic events could materially adversely affect
our financial performance.
The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis,
cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of
climate change or otherwise; severe changes in climate; geo-political events; global health epidemics or pandemics or other
contagious outbreaks such as the recent coronavirus (COVID-19) outbreak; and catastrophic events, such as war, civil unrest,
terrorist attacks or other acts of violence, including active shooter situations (such as those that have occurred in our U.S.
stores), in countries in which we operate or in which our suppliers are located, could adversely affect our operations and
financial performance.
Such events could result in physical damage to, or the complete loss of, one or more of our properties, the closure of one or
more stores, clubs and distribution facilities, limitations on store or club operating hours, the lack of an adequate work force in
a market, the inability of customers and associates to reach or have transportation to our stores and clubs affected by such
events, the evacuation of the populace from areas in which our stores, clubs and distribution facilities are located, the
unavailability of our digital platforms to our customers, changes in the purchasing patterns of consumers (including the
frequency of visits by consumers to physical retail locations, whether as a result of limitations on large gatherings, travel and
movement limitations or otherwise) and in consumers' disposable income, the temporary or long-term disruption in the supply
of products from some suppliers, the disruption in the transport of goods from overseas, the disruption or delay in the delivery
of goods to our distribution facilities or stores within a country in which we are operating, the reduction in the availability of
products in our stores, the disruption of utility services to our stores and our facilities, and the disruption in our communications
with our stores. For example, our results for the fourth quarter of fiscal 2020 were negatively impacted by riots and looting in
Chile which resulted in us closing a number of our stores until the disruption abated.
We bear the risk of losses incurred as a result of physical damage to, or destruction of, any stores, clubs and distribution
facilities, loss or spoilage of inventory and business interruption caused by such events. These events and their impacts could
otherwise disrupt and adversely affect our operations in the areas in which they occur and could materially adversely affect our
financial performance.
Risks associated with our suppliers could materially adversely affect our financial performance.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the
products we sell is an important factor in our financial performance. We expect our suppliers to comply with applicable laws,
including labor, safety, anti-corruption and environmental laws, and to otherwise meet our required supplier standards of
conduct. Our ability to find qualified suppliers who uphold our standards, and to access products in a timely and efficient
manner, is a significant challenge, especially with respect to suppliers located and goods sourced outside the U.S.
Political and economic instability, as well as other impactful events and circumstances in the countries in which our suppliers
and their manufacturers are located (such as the recent coronavirus outbreak which could result in potential disruptions or
delays to our global supply chain), the financial instability of suppliers, suppliers' failure to meet our terms and conditions or
our supplier standards (including our responsible sourcing standards), labor problems experienced by our suppliers and their
manufacturers, the av...


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