Providing opportunity &
serving our communities
2018 ANNUAL REPORT
$250B
250,000+
U.S. associates
graduated from
Walmart Academy
Commitment to
purchase products that
support American jobs
1 Gigaton
$35M+
Commitment to
work with suppliers to
reduce emissions in the
value chain
Donated to 2017
hurricane relief
Walmart Inc. (NYSE: WMT)
702 S.W. 8th Street
Bentonville, Arkansas 72716 USA
479-273-4000
walmart.com
The minimized environmental footprint of this report is the result of an extensive, collaborative effort of Walmart and our supply
chain partners. The environmental and social impact continues to be an important consideration. It is printed on paper from
well-managed forests containing recycled PCW fiber that is Elementally Chlorine Free (ECF). It is printed using environmental
manufacturing principles that were utilized in the printing process. These practices include environmentally responsible
procurement, lean manufacturing, green chemistry principles, the recycling of residual materials and reduced volatile organic
compound inks and coatings.
2018 Annual Report
For more information, please see our Global Responsibility Report at:
corporate.walmart.com/global-responsibility
ACCELERATING
INNOVATION
Corporate and Stock Information
Listing
New York Stock Exchange
Stock Symbol: WMT
Corporate Information
Stock Registrar and Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 505000
Louisville, Kentucky 40233-5000
1-800-438-6278
TDD for hearing-impaired inside the U.S. 1-800-952-9245
Internet: http://www.computershare.com
$500.3 billion
Total Revenue
Annual Meeting
Our Annual Meeting of Shareholders will be held on Wednesday,
May 30, 2018 at 10:00 a.m. (Central Time) in the John Q. Hammons
Center, Rogers, Arkansas.
Communication With Shareholders
Walmart Inc. periodically communicates with its shareholders and
other members of the investment community about our operations.
For further information regarding our policy on shareholder and
investor communications refer to our website: www.stock.walmart.com.
$28.3 billion
Operating Cash Flow
The following reports are available without charge upon request
by writing the Company c/o Investor Relations or by calling
(479) 273-8446. These reports are also available via the
corporate website.
$14.4 billion
cash returned to
shareholders through
dividends and share
repurchases
$11.5 billion
Walmart U.S.
eCommerce
sales
$10.1 billion
Capital Expenditures
• Annual Report on Form 10-K
• Quarterly Reports on Form 10-Q
• Earnings Releases
• Current Reports on Form 8-K
• Annual Shareholders’ Meeting Proxy Statement
• Global Responsibility Report
• Culture, Diversity & Inclusion Report
Dividends Paid Per Share
For fiscal 2018, dividends were paid based on the following schedule:
April 3, 2017
$0.51
June 5, 2017
0.51
September 5, 2017
0.51
January 2, 2018
0.51
For fiscal 2017, dividends were paid based on the following schedule:
April 4, 2016
$0.50
June 6, 2016
0.50
September 6, 2016
0.50
January 3, 2017
0.50
Stock Performance Chart
This graph compares the cumulative total shareholder return on
Walmart’s common stock during the five fiscal years ending in
fiscal 2018 to the cumulative total returns on the S&P 500 Retailing
Index and the S&P 500 Index. The comparison assumes $100 was
invested on February 1, 2013, in shares of our common stock and
in each of the indices shown and assumes that all of the dividends
were reinvested.
Comparison of 5-Year Cumulative Total Return*
Among Walmart Inc., the S&P 500 Index and S&P 500 Retailing Index
Walmart Inc.
Independent Registered Public Accounting Firm
Ernst & Young LLP
5417 Pinnacle Point Dr., Suite 501
Rogers, AR 72758
$300
Market Price of Common Stock
The high market price and low market price per share for the
Company’s common stock for each fiscal quarter in fiscal 2018
and 2017 were as follows:
$100
$250
$200
$150
2018
270 million
customers
a week
over
11,700 stores
operating in
28 countries
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
2017
Low
$ 75.77 $ 66.04
80.47
73.13
89.11
77.50
109.98
87.00
High
Low
$ 70.08 $ 62.35
74.35
62.72
75.19
67.07
72.48
65.28
The high market price and low market price per share for the Company’s
common stock for the first fiscal quarter of fiscal 2019, were as follows:
2019
1st Quarter(1)
(1) Through March 28, 2018.
2 | WALMART
S&P 500 Retailing Index
$350
$ 50
$ 0
2013
2014
2015
High
$106.56
Low
$85.28
2016
2017
2018
Fiscal Years
Fiscal Years Ended January 31,
Serve nearly
S&P 500 Index
*A ssumes $100 Invested on February 1, 2013
Assumes Dividends Reinvested
Fiscal Year Ending January 31, 2018
Fiscal Years Ended January 31,
2013
2014
2015
2016
2017
2018
Walmart Inc.
$100.00 $109.39 $127.58 $102.39 $105.97 $173.61
S&P 500 Index
100.00 121.52 138.80 137.88 165.51 209.22
S&P 500 Retailing Index 100.00 127.72 153.64 184.32 218.76 321.37
Holders of Record of Common Stock
As of March 28, 2018, there were 229,858 holders of record of
Walmart’s common stock.
Designed and produced by Corporate Reports Inc./Atlanta www.cricommunications.com
Walmart by the numbers
Dividends Payable Per Share
For fiscal 2019, dividends will be paid based on the following schedule:
April 2, 2018
$0.52
June 4, 2018
0.52
September 4, 2018
0.52
January 2, 2019
0.52
CEO LETTER
Dear shareholders,
associates and customers:
Recently I was talking to Chad Daggett about his experience leading
our Sam’s Club in Bangor, Maine (he was recently promoted to a new
role). Chad’s club had a good year and we were recognizing him for his
servant leadership in the club and the community. He was quick to give
credit to his team and said, “If you treat people like they make a
difference, they will.”
In that moment, he captured what makes our company unique: it’s our people, our culture, our
purpose and our values that make the difference for our business and have enabled our success
since the start. And those are the things that will empower our success in the future.
We’ve had an exciting year at Walmart. We have the right strategy and we’re
making progress putting our unique assets to work to serve customers in
all the ways they want to shop. We are confident in our strategy because
customers are responding. We are confident in our ability to execute the
strategy because we have the culture, the talent and the resources not
only to deliver the current plan, but also to dream of new things and new
ways to transform our business. We will delight customers in ways they
might not have even thought of yet. We’re out to provide an easy, fast,
friendly and fun shopping experience for them whether they shop with
us in stores, online, via a mobile device, with their voice or with
virtual reality, augmented reality or whatever comes next.
This year we made great progress accelerating innovation to save
customers both money and time. In our stores, we’re digitizing
experiences to make it easier for customers to shop and more
efficient for associates to manage inventory and perform routine
tasks. Our eCommerce business continues to scale as we launch
new ways to enhance the customer experience. We’re moving
faster, getting stronger and we have good momentum
throughout the business.
Last fiscal year we reached more than $500 billion in revenue
for the first time as a company. Walmart U.S. delivered the
highest comp sales growth in nine years and U.S. eCommerce
sales grew 44 percent. Walmart International had 10 of 11 markets
post positive comp sales for the year and five of those markets
grew comp sales by more than 5 percent. Sam’s Club comp
sales continue to improve and the business is repositioned
to capitalize on future growth. We have a strong foundation
and great opportunities to better serve customers.
I’m excited about what the future holds.
HERE’S MORE ABOUT WHAT WE’VE BEEN
UP TO: First, we know our customers’ lives are busier
than ever before, so our first objective is to make every
day easier for them. They rely on us for low prices and
they want us to save them time. We’re leveraging our
stores as a strategic advantage in new ways. This past
year, we nearly doubled the number of stores offering
online grocery pickup to more than 1,100 locations in
the U.S. and we’ll add another 1,000 locations in fiscal
2019. We’re expanding online grocery in Canada, Mexico
and China as well. We’re also broadening our delivery
capabilities in the U.S., China and other international
markets. For example, through our partnership with
JD Daojia in China, we offer grocery delivery in less
than one hour in over 160 stores in China. We launched
an express checkout experience in pharmacy, money
services, and returns at Walmart U.S. Sam’s Club Scan
& Go has been well-received by members and we’ve
introduced this capability in certain Walmart U.S.
stores as well as in Canada.
We launched free 2-day shipping and easy reorder on
Walmart.com and the response has been strong. Sam’s
Club also enhanced the value of the Plus membership with
the offer of free shipping. Our eCommerce assortment
has also improved. In the U.S., we’ve doubled the number
of items on Walmart.com over the past year. Jet.com
continues to complement Walmart.com nicely with
its appeal to higher-income, urban,
millennial customers. Acquisitions
like Bonobos bring unique,
private branded products to
our shopping experience,
and relationships with
partners like Lord & Taylor
enable us to offer brands
and experiences that
complement our own
assortment. We’re also
partnering with Google on
personalized voice shopping.
Outside the U.S., we launched
eCommerce marketplaces in Canada and Mexico so that
customers have access to more of the general merchandise
assortments they desire. Overall, it’s a lot easier to shop
with Walmart today than it used to be. And, we’re going
to keep getting better as we focus on serving customers
seamlessly across our apps, sites and stores.
Nearly
Stores
2X
the spend
eCommerce
Customers who shop in store and become eCommerce
customers spend nearly twice as much overall.
Second, we’re changing how we work to become more
efficient. We’re equipping and empowering our associates
to be successful with better information, tools and
training. In stores, this means our associates are
spending more time driving sales and less time doing
repetitive tasks. We’ve opened training academies to
further develop the retail skills of our associates and
we’ve deployed new technology and apps to help them
improve in-stock levels and better manage price changes.
We’re also testing shelf-scanning technology in stores
and distribution centers to handle routine tasks. We
will compete with technology, but we will win with our
people. We’re creating a high-performance culture that
rewards achievements and fosters accountability while
remaining true to our core values.
A YEAR OF ACCELERATED INNOVATION
JANUARY
Launched 2-day free
shipping on Walmart.com
for orders over $35
2 | WALMART
FEBRUARY
Walmart U.S. mobile
express money and
pharmacy services
launched
MARCH
Acquired
ModCloth
APRIL
Introduced pickup
discount on
Walmart.com
MAY
Launched Sam’s Club
Global Flagship Store
on JD.com in China
JUNE
Acquired
Bonobos
CEO LETTER
The investments we’re
making are critical
to winning with
customers as
we’re focused on
delivering results
and operating
with discipline.
An everyday low
cost mindset is
core to who we
are as a company
and it helps fuel the
productivity loop
enabling lower prices
for customers. We’re
laser-focused on improving
productivity throughout the
organization and leveraging expenses as
a company. We’re also being more strategic with capital
allocation to deliver strong efficient growth. We’re
prioritizing eCommerce, store remodels and customer
initiatives like online grocery over new store openings.
In addition, we’ve made strategic choices around our
portfolio including closing certain stores and clubs and
winding-down the first party eCommerce business in
Brazil. These decisions are positioning the business for
more efficient, sustainable growth in the future.
Finally, we want to be the most trusted retailer. We
believe in the concept of shared value where Walmart
operates for the benefit of not just customers, associates
and shareholders, but all stakeholders including suppliers,
communities and society in general. It’s important for
us to do things ethically and the right way. Customers
trust us for low prices on quality merchandise. They
also want the products they buy to be good for the
planet and the people who made them so we’ve invested
to promote the safety and dignity of the people who
make the products we sell. We’ve also implemented
leading technologies in our stores and supply chain to
promote the highest freshness, quality and safety in
the food we sell, while at the same time improving
the safety of our operations worldwide.
JULY
Opened new
eCommerce fulfillment
center in Florida
AUGUST
Google partnership to
deliver personalized
voice shopping
SEPTEMBER
1,000th Online
Grocery location
in Walmart U.S.
Many of our customers also value the role we play
in their communities. We provide good jobs for our
associates with opportunity to build a career with
Walmart. Earlier this year, we increased the starting
wage for our U.S. associates to $11 per hour and
expanded maternity and parental leave for salaried
and hourly associates. Families are a priority to us and
connecting with and caring for a new family member
is obviously important. We’re working hard to provide
opportunities for associates to be successful at Walmart
or wherever their careers take them.
We’re also ready to support the communities we serve
during times of crisis. I could not be more proud of
the resolve our associates displayed this past year in
responding to the devastating damage caused by the
hurricanes in Puerto Rico, Texas and Florida and the
earthquake in Mexico. The character of our people was
on full display. We believed they would make a difference
and they did not disappoint. In addition, we’re enhancing
the environmental sustainability of our operations
and we’re investing to make our supply chain more
transparent. It’s really all about being true to our
purpose: we save people money so they can live better.
Thanks for your continued interest in our company and
for investing in our future. We’re well-positioned to
win—we have the plan, we have the assets, and most
importantly, we have the people who are hungry to
make a difference and innovate for customers in new
ways. This is a great time to be at Walmart. I am excited
for the year and what we will accomplish.
Sincerely,
Doug McMillon
President and Chief Executive Officer
Walmart Inc.
OCTOBER
New membership
sign-up process
at Sam’s Club
NOVEMBER
Expanded one-hour
grocery delivery to
nearly 140 stores
in China
DECEMBER
Announced our
name change
to Walmart Inc.
2018 ANNUAL REPORT | 3
CFO MESSAGE
Winning with customers and shareholders
It’s an exciting time at Walmart
as we’re transforming the
business to serve customers
more effectively. Customers
are busier than ever, so
we’re innovating and
leveraging technology
to save them time as
well as money.
Our financial strength
provides the flexibility to
win with both customers and
shareholders. For customers,
we’ve invested in initiatives such
as online grocery, mobile express
checkout in our stores, and free 2-day
shipping for orders over $35 from Walmart.com. We
made acquisitions to improve our online assortment and
we’re partnering with others, like Google and JD.com,
in new ways. At the same time, we provided solid cash
returns to shareholders through a meaningful and growing
dividend and continued share repurchases.
We’re incredibly well-positioned with unique assets to
win in this new age of retail and the fiscal 2018 results
reflect Walmart’s strong financial position:
• Total revenue surpassed $500 billion for the first time;
• Walmart U.S. comp sales were the highest since
fiscal 2009;
• Walmart U.S. eCommerce sales grew 44 percent;
• Operating cash flow was $28.3 billion, and;
• We returned $14.4 billion to shareholders through
dividends and share repurchases.
Our financial framework helps guide decisions as we
grow the business. The three key elements are: strong,
efficient growth; consistent operating discipline; and
strategic capital allocation.
STRONG, EFFICIENT GROWTH. We’re focused on
our most productive and profitable growth opportunities
by prioritizing growth from comp sales and eCommerce
versus opening new stores. We’ve seen good momentum
with each of our segments delivering strong comp sales
growth this past year. The customer experience in our
stores has improved as we’re making shopping easy,
fast, friendly and fun. Walmart U.S. eCommerce sales
growth was also strong and we’re focused on continuing
to accelerate eCommerce innovation and omni-channel
offerings to provide the convenience customers expect.
4 | WALMART
CONSISTENT OPERATING DISCIPLINE. The
everyday low prices we provide to customers are enabled
when we operate at everyday low costs. We’ve made
headway in cost of goods efficiencies and working capital
productivity with strong inventory management. Expenses
are not where we want them to be overall, but we started
bending the cost curve last year, particularly in Walmart
U.S. stores and in International. We’re changing how we
work by improving processes and increasingly using
technology and automation to be more productive,
especially in support functions. We’ll continue to make
smart investments that help us grow faster and compete
more effectively to win long-term.
STRATEGIC CAPITAL ALLOCATION. Walmart
generates substantial cash and we’ve aligned our capital
priorities with the long-term strategy. Our first priority
is to invest in growing the business efficiently. We’re
being more disciplined and thoughtful with every dollar
of capital, which led to a decline in capital expenditures
in fiscal 2018. We’ve shifted spend from opening new
stores to remodels, eCommerce, supply chain and
technology to set us up for the future. We’ll continue
to invest in customer initiatives like online grocery,
pickup towers, and an expansion of grocery delivery.
We’ll also be opportunistic with M&A while being open
to taking action on assets within our portfolio to
simplify the business. Secondly, our dividend is important
and we’ve increased it for 45 consecutive years. Finally,
we’re committed to the share repurchase program we
announced last October as we continue to believe in
the long-term value of Walmart.
We’re confident that over time, these financial priorities
will help us drive sustainable top line and bottom line
growth, and generate solid returns for shareholders.
In closing, we’re executing our strategy, we’re delivering
results and we’re doing this from a base of incredible
financial strength. We’re committed to growing the
value of the company for our shareholders while we win
with customers.
Thanks for your investment in Walmart.
Sincerely,
Brett Biggs
Executive Vice President
and Chief Financial Officer
Walmart Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-K
___________________________________________
ý Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended January 31, 2018, 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)
___________________________________________
Delaware
71-0415188
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
702 S.W. 8th Street
Bentonville, Arkansas
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
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
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
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 ý
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 ý
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 ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files).
Yes ý No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
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
ý
o
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
o
o
o
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 ý
As of July 31, 2017, 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, 2017, was
$114,770,199,895. 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 2,950,696,818 shares of common stock outstanding as of March 28, 2018.
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 May 30, 2018 (the "Proxy
Statement")
Part III
Walmart Inc.
Form 10-K
For the Fiscal Year Ended January 31, 2018
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
17
26
27
29
30
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
31
33
34
48
51
85
85
86
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
87
87
87
87
87
Exhibits, Financial Statement Schedules
Signatures
Exhibit Index
88
88
90
Part IV
Item 15
WALMART INC.
(formerly "WAL-MART STORES, INC.")
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JANUARY 31, 2018
On February 1, 2018, the legal name of our corporation became "Walmart Inc.," changing from "Wal-Mart Stores, Inc." 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 May 30,
2018 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 or increase, in or over certain periods, of or in certain financial items or measures or
operating measures, including our earnings per share, including as adjusted for certain items, 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, new store
openings and investments in particular formats;
• investments and capital expenditures we will make and how certain of those investments and capital expenditures are
expected to be financed;
• our plans to increase investments in eCommerce, technology, store remodels and other customer initiatives, such as
online grocery locations;
• 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 domestic operations
without repatriating earnings we hold outside of the United States;
• our intention to reinvest the earnings we hold outside of the United States in our foreign operations and certain laws,
other limitations and potential taxes on anticipated future repatriations of such earnings not materially affecting our
liquidity, financial condition or results of 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 to which we are subject; or
• 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.
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,"
4
"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,"
"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.
The forward-looking statements include statements made in Part I, Item 3. "Legal Proceedings" in this Annual Report on Form
10-K as to our belief that the possible loss or range of any possible loss that may be incurred in connection with certain legal
proceedings will not be material to our financial condition, results of operations, or liquidity.
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;
• Walmart's need to repatriate earnings held outside of the U.S. and changes in U.S. and international tax regulations;
• customer traffic 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;
• Walmart's ability to successfully integrate acquired businesses, including within the eCommerce space;
• the amount of shrinkage Walmart experiences;
• consumer acceptance of and response to Walmart's stores and clubs, digital 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;
• Walmart's expenditures for Foreign Corrupt Practices Act ("FCPA") and other compliance-related matters including
the adequacy of our accrual for the FCPA matter;
• 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;
5
•
•
•
•
•
unexpected changes in Walmart's objectives and plans;
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;
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;
• 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;
• the possibility of the imposition of new taxes on imports and new tariffs and trade restrictions and changes in tariff
rates and trade restrictions;
• changes in currency control laws;
• changes in the level of public assistance payments;
• the timing of federal income tax refunds;
• natural disasters, public health emergencies, civil disturbances, and terrorist attacks; 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 made on our behalf is not exclusive. We are subject to other risks discussed under the caption
"Item 1A. Risk Factors," and that we may discuss in Management's Discussions and Analysis of Financial Condition and
Results of Operations 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 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 forwardlooking 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 – in retail stores and through eCommerce. Through innovation, we are striving to create a customer-centric
experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our
customers. Each week, we serve nearly 270 million customers who visit our more than 11,700 stores and numerous
eCommerce websites under 65 banners in 28 countries.
Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience.
Leading on price is designed to 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. Price leadership
is core to who we are. Everyday low cost ("EDLC") is our commitment to control expenses so those cost savings can be passed
along to our customers. Our omni-channel presence provides customers access to our broad assortment anytime and anywhere.
We strive to give our customers and members a great digital and physical shopping experience.
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, 2018 ("fiscal
2018"), January 31, 2017 ("fiscal 2017") and January 31, 2016 ("fiscal 2016"). During fiscal 2018, we generated total revenues
of $500.3 billion, which was primarily comprised of net sales of $495.8 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
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, 2018, our Walmart International segment conducted business in 27 countries.
In 2000, we began our first eCommerce initiative by creating walmart.com. That same year, we also created samsclub.com.
Since then, our digital presence has continued to grow. In 2007, walmart.com launched its Site to Store service, enabling
customers to make a purchase online and pick up merchandise in stores. In 2016, we acquired jet.com in the U.S. and formed a
strategic alliance with JD.com in China. Subsequent to the jet.com purchase, we have acquired several other U.S. eCommerce
entities. In 2017, walmart.com launched free two-day shipping on more than 2 million items and we created Store No 8, a tech
incubator with a focus to drive commerce forward. These eCommerce efforts have led to omni-channel offerings in many
markets, including over 1,100 "Online Grocery" pickup locations in the U.S.
Information About Our 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, Brazil, 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.
Walmart U.S. is our largest segment and operates retail stores in all 50 states in the U.S., Washington D.C. and Puerto Rico,
with three primary store formats, as well as eCommerce. Walmart U.S. generated approximately 64% of our net sales in fiscal
2018, and of our three segments, Walmart U.S. is the largest and 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.
Walmart International consists of operations in 27 countries outside of the U.S. and is 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. Walmart International generated
7
approximately 24% of our fiscal 2018 net sales. The overall gross profit rate for Walmart International is lower than that of
Walmart U.S. primarily because of its merchandise mix. Walmart International is our second largest segment.
Sam's Club consists of membership-only warehouse clubs and operates in 44 states in the U.S. and in Puerto Rico, as well as
eCommerce. Sam's Club accounted for approximately 12% of our fiscal 2018 net sales. As a membership-only 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.
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, 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
The Walmart U.S. segment is a mass merchandiser of consumer products, operating under the "Walmart," "Wal-Mart" and
"Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. The Walmart U.S. segment
had net sales of $318.5 billion, $307.8 billion and $298.4 billion for fiscal 2018, 2017 and 2016, respectively. During the most
recent fiscal year, no single unit accounted for as much as 1% of total Company consolidated net sales.
Physical. Walmart U.S. operates retail stores in the U.S., including in all 50 states, Washington D.C. and Puerto Rico, with
supercenters in 49 states, Washington D.C. and Puerto Rico, discount stores in 41 states and Puerto Rico and Neighborhood
Markets and other small store formats in 36 states, Washington D.C. and Puerto Rico. The following table provides square
footage details on each of our formats as of January 31, 2018:
Minimum
Square Feet
Supercenters (general merchandise and grocery)
Discount stores (general merchandise and limited grocery)
Neighborhood Markets(1) (grocery)
(1)
Maximum
Square Feet
69,000
30,000
28,000
Average
Square Feet
260,000
206,000
65,000
178,000
105,000
42,000
Excludes other small formats.
The following table provides the retail unit count and retail square feet by format for the fiscal years shown:
Supercenters
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
Opened
72
79
55
38
30
Closed
—
—
(16)
(2)
—
Conversions(1)
58
40
19
21
9
Discount Stores
Total(2)
3,158
3,288
3,407
3,465
3,522
3,561
Square
Feet(2)
570,409
589,858
607,415
616,428
625,930
632,479
Opened
4
2
—
—
—
Closed
—
—
(9)
(6)
(6)
Neighborhood Markets and Other Small Formats
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
(1)
(2)
(3)
Opened
122
235
161
73
85
Closed
—
(3)
(133)
(5)
(20)
Conversions(1)
(1)
—
—
—
—
Total(2)
286
407
639
667
735
800
Square
Feet(2)
11,226
15,778
23,370
27,228
30,012
30,111
Conversions(1)
Total(2)
561
508
470
442
415
400
(57)
(40)
(19)
(21)
(9)
Square
Feet(2)
59,098
53,496
49,327
45,991
43,347
41,926
Total Segment
Opened(3)
Total(2)
Closed
198
316
216
111
115
—
(3)
(158)
(13)
(26)
4,005
4,203
4,516
4,574
4,672
4,761
Square
Feet(2)
640,733
659,132
680,112
689,647
699,289
704,516
Conversions of discount stores or Neighborhood Markets to supercenters.
"Total" and "Square Feet" columns are as of January 31 for the years shown. Retail square feet are reported in thousands.
Total opened, net of conversions of discount stores or Neighborhood Markets to supercenters.
Digital. Walmart U.S. provides its customers access to a broad assortment of merchandise, including products not found in our
physical stores, and services online through our eCommerce family of brands' websites and third party retail partnership
channels, as well as through related mobile commerce and voice-activated commerce applications. Our eCommerce family of
brands includes walmart.com, jet.com, hayneedle.com, shoes.com, moosejaw.com, modcloth.com and bonobos.com.
Walmart.com offers access to nearly 75 million SKUs, including those carried on Marketplace, a feature of the website that
permits third parties to sell merchandise on walmart.com. Walmart.com is also integrated with our physical stores through
8
services like "Walmart Pickup," "Pickup Today" and in over 1,100 "Online Grocery" pickup locations to provide an omnichannel offering to our customers. Walmart U.S. also offers access to digital content and services including Vudu.
Merchandise. Walmart U.S. does business in three strategic merchandise units, listed below, across several store formats
including supercenters, discount stores, Neighborhood Markets and other small store formats, as well as on our eCommerce
websites.
• 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. also offers fuel and financial services and related products, including money orders, prepaid cards, wire transfers,
money transfers, check cashing and bill payment. These services total less than 1% of annual net sales.
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 store brands, including: "Adventure Force," "AutoDrive," "BlackWeb," "Equate,"
"Everstart," "Faded Glory," "George," "Great Value," "Holiday Time," "Hyper Tough," "Kid Connection," "Mainstays,"
"Marketside," "My Life As," "No Boundaries," "Ol' Roy," "Onn," "Ozark Trail," "Parent's Choice," "Prima Della," "Pure
Balance," "Sam's Choice," "Special Kitty," "Spring Valley," "Terra & Sky," "Time and Tru," "Way to Celebrate" and "Wonder
Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes &
Gardens," "Farberware," "Russell" and "SwissTech."
The percentage of strategic merchandise unit net sales for Walmart U.S., including online sales, was as follows for fiscal 2018,
2017 and 2016:
STRATEGIC MERCHANDISE UNITS
Fiscal Years Ended January 31,
2018
2017
2016
Grocery
Health and wellness
General merchandise
Total
56%
11%
33%
100%
56%
11%
33%
100%
56%
11%
33%
100%
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 at our stores and through our eCommerce websites and mobile commerce applications.
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 both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. We also compete with others for desirable sites for new or relocated retail units.
Our ability to develop, open 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 a low price every day 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;
9
•
•
•
•
•
•
Rollbacks: our commitment to pass cost savings on to the customer by lowering prices on selected goods;
Savings Catcher, Save Even More and Ad Match: strategies to meet or be below a competitor's advertised price;
Walmart Pickup: customer places order online and picks it up for free from a store. The merchandise is fulfilled
through our distribution facilities;
Pickup Today: customer places order online and picks it up at a store within four hours for free. The order is fulfilled
through existing store inventory;
Online Grocery: customer places grocery order online and has it delivered to home or picks it up at one of our
participating stores or remote locations; and
Money Back Guarantee: our commitment to ensure the quality and freshness of the fruits and vegetables in our stores
by offering our customers a 100 percent money-back guarantee if they are not satisfied.
We offer a broad assortment of merchandise that provides one-stop shopping, in-stock levels that give our customers confidence
that we will have the products they need and operating hours that allow customers to shop at their convenience. In addition, our
eCommerce capabilities, including omni-channel transactions that involve both an eCommerce platform and a physical format,
are important factors in our competition with other retailers.
Distribution. For fiscal 2018, approximately 78% of Walmart U.S.'s purchases of store merchandise were shipped through our
157 distribution facilities, which are located strategically throughout the U.S. The remaining 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 30 dedicated eCommerce fulfillment centers.
The following table provides further details of our distribution facilities, including return facilities and dedicated eCommerce
fulfillment centers, as of January 31, 2018:
Walmart U.S. distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
Total
103
2
23
29
157
Walmart International Segment
The Walmart International segment consists of operations in 27 countries outside of the U.S. and includes numerous formats
divided into three major categories: retail, wholesale and other. These categories, including eCommerce, consist of many
formats, including: supercenters, supermarkets, hypermarkets, warehouse clubs (including Sam's Clubs) and cash & carry. The
segment's net sales for fiscal 2018, 2017 and 2016, were $118.1 billion, $116.1 billion and $123.4 billion, respectively, which
have been impacted by currency exchange rate fluctuations. During the most recent fiscal year, no single unit accounted for as
much as 1% of total Company net sales.
Physical. Walmart International includes physical stores operated by: our wholly-owned subsidiaries operating in Argentina,
Brazil, Canada, Chile, China, India, Japan and the United Kingdom; and our majority-owned subsidiaries operating 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) and Mexico.
Generally, retail units range in size from 8,900 square feet to 186,000 square feet. Our wholesale stores generally range in size
from 35,000 square feet to 185,000 square feet. Other, which includes drugstores and convenience stores operating under
various banners in Brazil, Mexico and the United Kingdom, range in size up to 2,400 square feet. Also, on a limited basis,
Walmart International operates financial institutions that provide consumer credit.
10
The following table provides the retail unit count(1) and retail square feet(2) for the fiscal years shown:
Africa
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
Unit
Count
Square
Feet
377
379
396
408
412
424
19,775
20,513
21,223
21,869
22,542
23,134
China
Fiscal Year
Balance forward
2014
2015
2016
2017
2018
(1)
(2)
(3)
Unit
Count
393
405
411
432
439
443
Argentina
Unit
Count
Square
Feet
94
104
105
108
107
106
7,531
8,062
8,119
8,280
8,264
8,305
India
Square
Feet
65,801
67,205
68,269
71,724
73,172
73,615
Unit
Count
20
20
20
21
20
20
Brazil
Unit
Count
Canada
Square
Feet
558
556
557
499
498
465
32,494
32,501
33,028
30,675
30,642
29,824
1,083
1,083
1,083
1,146
1,091
1,091
Unit
Count
Square
Feet
438
438
431
346
341
336
379
389
394
400
410
410
Square
Feet
48,354
49,914
50,927
51,784
53,088
53,082
Mexico(3)
Japan
Square
Feet
Unit
Count
24,448
24,489
24,429
22,551
21,921
21,181
Unit
Count
1,988
2,199
2,290
2,360
2,411
2,358
Square
Feet
88,833
94,900
98,419
100,308
101,681
97,024
Central
America
Unit
Square
Count
Feet
642
661
690
709
731
778
Chile
Unit
Count
9,873
10,427
11,094
11,410
11,770
12,448
United
Kingdom
Unit
Square
Count
Feet
565
576
592
621
631
642
34,810
35,416
36,277
37,044
37,338
37,587
329
380
404
395
363
378
Square
Feet
12,671
13,697
14,762
15,407
15,260
15,990
Total Segment
Unit
Count
5,783
6,107
6,290
6,299
6,363
6,360
Square
Feet
345,673
358,207
367,630
372,198
376,769
373,281
"Unit Count" includes retail stores, wholesale clubs and other, which includes drugstores and convenience stores. Walmart International unit counts, with
the exception of Canada, are stated as of December 31, to correspond with the fiscal year end of the related geographic market. Canada unit counts and
square footage are stated as of January 31. For the balance forward, all country balances are stated as of the end of fiscal year 2013.
"Square Feet" columns are reported in thousands.
All periods presented exclude units and square feet for the Vips restaurant business. The Company completed the sale of the Vips restaurant business in
fiscal 2015.
Unit counts(1) as of January 31, 2018 for Walmart International are summarized by major category for each geographic market
as follows:
Geographic Market
Retail
(3)
Wholesale
Other(2)
Total
Africa
Argentina
Brazil
Canada
Central America(4)
Chile
China
India
Japan
Mexico
United Kingdom
335
106
380
410
778
373
424
—
336
2,186
617
89
—
70
—
—
5
19
20
—
162
—
—
—
15
—
—
—
—
—
—
10
25
424
106
465
410
778
378
443
20
336
2,358
642
Total
5,945
365
50
6,360
(1)
(2)
(3)
(4)
Walmart International unit counts, with the exception of Canada, are stated as of December 31, 2017, to correspond with the balance sheet date of the
related geographic market. Canada unit counts are stated as of January 31, 2018.
Other includes drug stores and convenience stores.
Africa unit counts by country are Botswana (11), Ghana (2), Kenya (1), Lesotho (3), Malawi (2), Mozambique (5), Namibia (4), Nigeria (5), South Africa
(382), Swaziland (1), Tanzania (1), Uganda (1) and Zambia (6).
Central America unit counts by country are Costa Rica (247), El Salvador (95), Guatemala (238), Honduras (103) and Nicaragua (95).
Digital. Walmart International operates eCommerce websites in numerous countries. Customers have access through our
eCommerce websites and, in countries where available, mobile commerce applications to a broad assortment of merchandise
and services, both of which vary by country. Our omni-channel offerings include capabilities like "Click & Collect" in the
United Kingdom and our grocery pick-up and delivery business in several other 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,
lower priced items. Along with the private brands we market globally, such as "Equate," "George," "Great Value," "Holiday
Time," "Mainstays," "Ol' Roy" and "Parent's Choice," our international markets have developed market specific brands
including "Aurrera," "Cambridge," "Chosen by You" and "Extra Special." In addition, we have developed relationships with
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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 both physical 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 digital retailers, as well as catalog businesses. We also
operate, on a limited basis, consumer credit operations. We compete with others for desirable sites for new or relocated units.
Our ability to develop, open and operate units at the right locations and to deliver a customer-centric experience that seamlessly
integrates digital and physical shopping determines, to a large extent, our competitive position in the markets in which Walmart
International operates. 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. In the markets in which we have eCommerce websites or
mobile commerce applications, those websites and applications help differentiate us from our competitors and help us compete
with other retailers for customers and their purchases, both in our digital and physical retail operations.
Distribution. We utilize a total of 188 distribution facilities located in Argentina, Brazil, Canada, Central America, Chile,
China, Japan, Mexico, South Africa and the United Kingdom. Through these facilities, we process and distribute both imported
and domestic products to the operating units of the Walmart International segment. During fiscal 2018, approximately 83% 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. The following table provides further
details of our international distribution facilities, including 17 dedicated eCommerce fulfillment centers, as of December 31,
2017, with the exception of distribution facilities in Canada, which are stated as of January 31, 2018:
International distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
Total
43
12
87
46
188
We ship merchandise purchased by customers on our eCommerce websites and through our mobile commerce applications by a
number of methods from multiple locations including from our dedicated eCommerce fulfillment centers.
Sam's Club Segment
The Sam's Club segment operates membership-only warehouse clubs, as well as samsclub.com, in the U.S. and had net sales of
$59.2 billion, $57.4 billion and $56.8 billion for fiscal 2018, 2017 and 2016, respectively. During the most recent fiscal year,
no single club location accounted for as much as 1% of total Company net sales.
Membership. Beginning in the year ending January 31, 2019 ("fiscal 2019"), Sam's Club simplified the membership program.
The following two options are available to members:
Membership Type
Plus
Annual Membership Fee
Club
$100
$45
Up to 16
Up to 8
Eligible for Cash Rewards
Yes
No
Eligible for Free Shipping
Yes
No
Number of Add-on Memberships ($40 each)
All memberships include a spouse/household card at no additional cost. Plus Members are eligible for Cash Rewards, which is
a benefit that provides $10 for every $500 in 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 vast majority of merchandise available online, with no minimum order size. Free Shipping is yet another example of
creating a new Sam's Club for our members.
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Physical. As a membership-only warehouse club, Sam's Club facility sizes generally range between 94,000 and 168,000 square
feet, with an average size of approximately 134,000 square feet.
The following table provides the retail unit count and retail square feet for the fiscal years shown:
Fiscal Year
Opened
Closed
Balance forward
Total(1)
Square
Feet(1)
620
82,653
2014
12
—
632
84,382
2015
16
(1)
647
86,510
2016
8
—
655
87,552
2017
9
(4)
660
88,376
2018
4
(67)
597
80,068
(1)
"Total" and "Square Feet" columns are as of January 31 for the fiscal years shown. Retail square feet are reported in thousands.
Digital. Sam's Club provides its members 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. Samsclub.com experiences on
average 20.4 million unique visitors a month and offers access to approximately 59,000 SKUs providing the member the option
of delivery direct-to-home or to the club through services such as "Club Pickup." Digital retail supports our physical clubs with
capabilities like "Scan and Go," a mobile checkout and payment solution, which allows members to bypass the checkout line.
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 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.
The Member's Mark brand continues to expand assortment and deliver member value. In fiscal 2018, Member's Mark sales
exceeded $10 billion, driven by growth in grocery, seasonal items and apparel. The percentage of net sales for Sam's Club,
including eCommerce sales, by merchandise category, was as follows for fiscal 2018, 2017 and 2016:
MERCHANDISE CATEGORY
Fiscal Years Ended January 31,
2018
2017
2016
Grocery and consumables
58%
59%
59%
Fuel and other categories
21%
20%
20%
Home and apparel
9%
9%
9%
Technology, office and entertainment
6%
6%
7%
Health and wellness
6%
6%
5%
100%
100%
100%
Total
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, all 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 at our clubs and online, including the co-branded Sam's Club "Cash Back" MasterCard.
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 and segment operating income
have 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 digital 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
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applications have increasingly become important factors in our ability to compete with other membership-only warehouse
clubs.
Distribution. During fiscal 2018, approximately 68% of Sam's Club's non-fuel purchases were shipped from Sam's Club's 22
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 purchases directly to Sam's Club locations. The following table provides further details of our dedicated distribution
facilities, including two dedicated eCommerce fulfillment centers and two dedicated import facilities, as of January 31, 2018:
Sam's Club distribution facilities
Owned and
Operated
Owned and
Third Party
Operated
Leased and
Operated
Third Party
Owned and
Operated
Total
3
3
3
13
22
The principal focus of Sam's Club's distribution operations is on cross-docking merchandise, while stored inventory is
minimized. Cross-docking is a distribution process under which shipments are directly transferred from inbound to outbound
trailers. Shipments typically spend less than 24 hours in a cross-dock facility, and sometimes less than an hour.
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.
Sam's Club ships merchandise purchased by members on samsclub.com and through its mobile commerce applications by a
number of methods from its dedicated eCommerce fulfillment centers and other distribution centers.
Other Segment Information
Certain financial information relating to our segments is included in Part II, Item 7 under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in Note 15 to our Consolidated Financial
Statements. Note 15 also includes information regarding total revenues and long-lived assets aggregated by our U.S. and nonU.S. operations.
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 United States, 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 a number of our
suppliers' annual sales, 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 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees ("associates")
worldwide, with 1.5 million associates in the U.S. and 0.8 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 and are continuing to improve. A large number of associates turn over each year, although Walmart U.S. turnover has
been improving in fiscal 2018 as a result of our focus on increasing wages and providing improved tools, technology and
training to associates.
14
Certain information relating to retirement-related benefits we provide to our associates is included in Note 12 to our
Consolidated Financial Statements.
In addition to retirement-related benefits, in the U.S., we offer a broad range of Company-paid benefits to our associates. These
include a store discount card or Sam's Club membership, bonuses based on Company performance, matching a portion of
purchases of our stock by associates through our Associate Stock Purchase Plan and life insurance. In addition to the healthcare benefits for eligible full-time and part-time associates in the U.S., as announced in January 2018, we expanded maternity
leave and implemented a new paid parental leave program to all full-time associates. We also introduced a $5,000 benefit to
assist eligible associates with adoption.
Similarly, in the operations outside the U.S., we provide a variety of associate benefits that vary based on customary local
practices and statutory requirements.
15
Executive Officers of the Registrant
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
Age
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
46
M. Brett Biggs
Executive Vice President and Chief Financial Officer, effective January 1,
2016. From January 2014 to December 2015, he served as Executive Vice
President and Chief Financial Officer of Walmart International. From January
2013 to January 2014, he was Executive Vice President and Chief Financial
Officer of Walmart U.S.
2016
49
Jacqueline P. Canney
Executive Vice President, Global People, effective August 3, 2015. From
September 2003 to July 2015, she served as the Managing Director of Global
Human Resources at Accenture plc., a global management consulting,
technology services and outsourcing company.
2015
50
David M. Chojnowski
Senior Vice President and Controller effective January 1, 2017. From October
2014 to January 2017, he served as Vice President and Controller, Walmart
U.S. From January 2013 to October 2014, he served as Vice President, Finance
Transformation, of Walmart International.
2017
48
Gregory Foran
Executive Vice President, President and Chief Executive Officer, Walmart U.S.
effective August 2014. From May 2014 to August 2014, he served as President
and Chief Executive Officer for the Walmart Asia region. From March 2012 to
May 2014, he served as President and Chief Executive Officer of Walmart
China.
2014
56
John Furner
Executive Vice President, President and Chief Executive Officer, Sam's Club,
effective February 1, 2017. From October 2015 to January 2017, he served as
Executive Vice President and Chief Merchandising Officer of Sam's Club.
From January 2013 to October 2015, he served as Senior Vice President and
Chief Merchandising Officer of Walmart China.
2017
43
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. From
January 2005 to July 2013, he served as Chief Executive Officer of Quidsi,
Inc., an eCommerce retailer that became a wholly-owned subsidiary of
Amazon.com, Inc. in April 2011.
2016
46
Judith McKenna
Executive Vice President, President and Chief Executive Officer, Walmart
International, effective February 1, 2018. From February 2015 to January
2018, she served as Executive Vice President and Chief Operating Officer of
Walmart U.S. Prior to that position, she served as Executive Vice President
and Chief Development Officer for Walmart U.S. from April 2014 to February
2015; as Executive Vice President, Strategy and Development, for Walmart
International, from April 2013 to April 2014; and as Chief Operating Officer of
Asda Group Limited, the Company's subsidiary in the United Kingdom, from
July 2011 to April 2013.
2018
51
C. Douglas McMillon
President and Chief Executive Officer, effective February 1, 2014. From
February 2009 to January 2014, he served as Executive Vice President,
President and Chief Executive Officer, Walmart International.
2014
51
New Executive Officer
Effective April 2, 2018, Rachel Brand, age 44, will join the Company as Executive Vice President, Global Governance and
Corporate Secretary. 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, she was an Associate Professor of Law at George Mason University
Antonin Scalia Law School. Prior to that position, she served as a Board Member on the Privacy and Civil Liberties Oversight
Board of the U.S. government from August 2012 to February 2017.
16
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. In addition, the public may read and copy any of the materials we file with the
SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. 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 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.
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 measures that create barriers to or increase the
costs associated with international trade, overall economic slowdown 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.
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 (whether through physical retail, digital
retail or the integration of both), which could materially adversely affect our financial performance.
Each of our segments competes for customers, employees, store and club sites, digital prominence, products and services and in
other important aspects of its business with many other local, regional, national and global physical and digital retailers,
wholesale club operators and retail intermediaries.
Our Walmart U.S. segment competes with both physical retailers operating discount, department, retail and wholesale grocers,
drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, and digital retailers, as well
as catalog businesses. Our Sam's Club segment competes with other wholesale club operators, as well as discount retailers,
retail and wholesale grocers, general merchandise wholesalers and distributors, gasoline stations, as well as digital retailers and
catalog businesses.
17
Our Walmart International segment competes with both physical 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 digital retailers, as well as catalog businesses.
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 the omni-channel integration of our physical and
digital retail operations.
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. Such consolidation, or other business combinations or alliances, 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.
We may not timely identify or effectively respond to consumer trends or preferences, which 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, whether for customers
purchasing products at our stores and clubs, through our digital platforms or through the combination of both. Price
transparency, assortment of products, customer experience, convenience 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, our market share and the growth of our business.
Failure to grow our eCommerce business through the omni-channel integration of physical and digital retail or
otherwise, and the cost of our increasing eCommerce investments, may materially adversely affect our market position,
net sales and financial performance.
The retail business is rapidly evolving and consumers are increasingly embracing shopping online and through mobile
commerce applications. 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, 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 build and deliver a seamless omni-channel
shopping experience and is further subject to the risks we face as outlined in this Item 1A. As a result, our market position, net
sales and financial performance could be adversely affected. In addition, a greater concentration of eCommerce sales could
result in a reduction in the amount of traffic in our stores and clubs, which would, in turn, reduce the opportunities for crossstore or cross-club sales of merchandise that such traffic creates and could reduce our sales within our stores and clubs and
materially adversely affect the financial performance of the physical retail side of our operations.
Furthermore, the cost of certain eCommerce and technology investments, including any operating losses incurred by acquired
eCommerce businesses will adversely impact our financial performance in the short-term and may adversely impact our
financial performance over the longer term.
The performance of strategic alliances to support the expansion of our Walmart International segment could materially
adversely affect our financial performance.
Our Walmart International segment may enter into strategic alliances in the countries in which we have existing operations or in
other markets to expand our digital retail operations, physical retail operations or both. Any strategic alliance may not generate
the level of eCommerce or other sales we anticipate when entering into that alliance or may otherwise adversely impact our
18
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 could materially adversely affect our financial performance.
Operational Risks
Natural disasters, changes in climate, and geo-political 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 and geo-political events, such as war, civil unrest or terrorist attacks in a
country 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, 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 and in consumers' disposable income, the temporary or long-term
disruption in the supply of products from some local and overseas 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 disruption in our communications with our stores.
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 the suppliers from whom our products are sourced 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 all of our suppliers to comply with applicable
laws, including labor, safety 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 in the countries in which our foreign suppliers and their manufacturers are located, the
financial instability of suppliers, suppliers' failure to meet certain of our supplier standards (including our responsible sourcing
standards), labor problems experienced by our suppliers and their manufacturers, the availability of raw materials to suppliers,
merchandise safety and quality issues, disruption in the transportation of merchandise from the suppliers and manufacturers to
our stores, clubs, and other facilities, including as a result of labor slowdowns at any port at which a material amount of
merchandise we purchase enters into the U.S., currency exchange rates, transport availability and cost, transport security,
inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.
In addition, the U.S.'s foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain
countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other
countries and other factors relating to foreign trade are beyond our control. These and other factors affecting our suppliers and
our access to products could adversely affect our financial performance.
If the products we sell are not safe or otherwise fail to meet our customers' expectations, we could lose customers, incur
liability for any injuries suffered by customers using or consuming a product we sell or otherwise experience material
adverse effects to our brand, reputation and financial performance.
Our customers count on us to provide them with safe products. Concerns regarding the safety of food and non-food products
that we source from our suppliers or that we prepare and then sell could cause customers to avoid purchasing certain products
from us, or to seek alternative sources of supply for all of their food and non-food needs, even if the basis for the concern is
outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish. As such,
any issue regarding the safety of any food or non-food items we sell, regardless of the cause, could adversely affect our brand,
reputation and financial performance.
19
We rely extensively on information systems to process transactions, summarize results and manage our business.
Disruptions in our systems could harm our ability to conduct our operations.
Given the number of individual transactions we have each year, it is crucial that we maintain uninterrupted operation of our
business-critical information systems. Our information systems are subject to damage or interruption from power outages,
computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service
attacks, security breaches (through cyber-attacks from cyber-attackers and sophisticated organizations), catastrophic events
such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our associates or contractors. Our information
systems are essential to our business operations, including the processing of transactions, management of our associates,
facilities, logistics, inventories, physical stores and clubs and our online operations. Our information systems are not fully
redundant and if our systems are damaged, breached or cease to function properly, we may have to make a significant
investment to repair or replace them, and we may suffer interruptions in our business operations in the interim. Any
interruption to our information systems may have a material adverse effect on our business or results of operations. In addition,
we are constantly updating our information technology processes and systems. The risk of system disruption is increased when
significant system changes are undertaken. If we fail to timely integrate and update our information systems and processes, we
may fail to realize the cost...
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