# How Walmart makes money

CXProWealth Business Lens · Walmart (WMT) · Q2 FY2027

Read from the 10-Q for the period 2026-05-01 to 2026-07-31, filed 2026-08-28 with the SEC (accession 0000104169-26-000154): https://www.sec.gov/Archives/edgar/data/104169/000010416926000154/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $187.9B (+5.9% on the year)
- Operating income: $9.4B (operating margin 5.0%)
- Net income: $6.4B (net margin 3.4%)
- Gross margin: 26.1%
- Free cash flow: $7.5B (4.0% of revenue)
- Cash conversion (operating cash flow / net income): 2.35x
- Capital expenditure: 4.0% of revenue

## Where the money goes (Q2 FY2027)

- Walmart U.S. → Total revenues: $125.9B
- Walmart International → Total revenues: $35.6B
- Sam's Club U.S. → Total revenues: $26.4B
- Total revenues → Cost of sales: $138.8B
- Total revenues → Gross profit: $49.1B
- Gross profit → Operating, selling, general and administrative expenses: $39.8B
- Gross profit → Operating income: $9.4B
- Operating income → Interest, net: $171.0M
- Interest, net → Debt: $137.0M
- Interest, net → Finance lease: $126.0M
- Interest income → Interest, net: $92.0M
- Operating income → Other (gains) and losses: $1.2B
- Operating income → Income before income taxes: $8.0B
- Income before income taxes → Provision for income taxes: $1.5B
- Income before income taxes → Consolidated net income: $6.5B
- Consolidated net income → Consolidated net income attributable to noncontrolling interest: $163.0M
- Consolidated net income → Consolidated net income attributable to Walmart: $6.4B

## Where the revenue comes from

### Segments (Segments and Disaggregated Revenue - Schedule of Segment Reporting Information by Segment (Details))

| Member | Value | Share |
|---|---:|---:|
| Walmart U.S. | $125.9B | 67.0% |
| Walmart International | $35.6B | 19.0% |
| Sam's Club U.S. | $26.4B | 14.0% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q2 FY2027 | Of revenue |
|---|---:|---:|
| Net sales | $186.1B | 99.0% |
| Membership and other income | $1.8B | 1.0% |
| **Total revenues** | $187.9B | 100% |
| Cost of sales | $138.8B | 73.9% |
| Operating, selling, general and administrative expenses | $39.8B | 21.2% |
| **Operating income** | $9.4B | 5.0% |
| Debt | $137.0M | 0.1% |
| Finance lease | $126.0M | 0.1% |
| Interest income | ($92.0M) | 0.0% |
| **Interest, net** | (-$171.0M) | 0.1% |
| Other (gains) and losses | (-$1.2B) | 0.6% |
| **Income before income taxes** | $8.0B | 4.3% |
| Provision for income taxes | $1.5B | 0.8% |
| **Consolidated net income** | $6.5B | 3.5% |
| Consolidated net income attributable to noncontrolling interest | ($163.0M) | 0.1% |
| **Consolidated net income attributable to Walmart** | $6.4B | 3.4% |
| Basic net income per common share attributable to Walmart (in dollars per share) | $1 | 0.0% |
| Diluted net income per common share attributable to Walmart (in dollars per share) | $1 | 0.0% |
| Basic (shares) | 7,954,000,000 |  |
| Diluted (shares) | 7,978,000,000 |  |
| Dividends declared per common share (in dollars per share) | $0 | 0.0% |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2008 | $377.0B | $22.0B | $12.7B | $20.6B | $14.9B | $5.7B |
| FY2009 | $404.3B | $22.8B | $13.4B | $23.1B | $11.5B | $11.6B |
| FY2010 | $408.1B | $24.0B | $14.4B | $26.2B | $12.2B | $14.1B |
| FY2011 | $421.8B | $25.5B | $16.4B | $23.6B | $12.7B | $10.9B |
| FY2012 | $446.5B | $26.5B | $15.7B | $24.3B | $13.5B | $10.7B |
| FY2013 | $468.7B | $27.7B | $17.0B | $25.6B | $12.9B | $12.7B |
| FY2014 | $476.3B | $26.9B | $16.0B | $23.3B | $13.1B | $10.1B |
| FY2015 | $485.7B | $27.1B | $16.4B | $28.6B | $12.2B | $16.4B |
| FY2016 | $482.1B | $24.1B | $14.7B | $27.6B | $11.5B | $16.1B |
| FY2017 | $485.9B | $22.8B | $13.6B | $31.7B | $10.6B | $21.1B |
| FY2018 | $500.3B | $20.4B | $9.9B | $28.3B | $10.1B | $18.3B |
| FY2019 | $514.4B | $22.0B | $6.7B | $27.8B | $10.3B | $17.4B |
| FY2020 | $524.0B | $20.6B | $14.9B | $25.3B | $10.7B | $14.6B |
| FY2021 | $559.2B | $22.5B | $13.5B | $36.1B | $10.3B | $25.8B |
| FY2022 | $572.8B | $25.9B | $13.7B | $24.2B | $13.1B | $11.1B |
| FY2023 | $611.3B | $20.4B | $11.7B | $28.8B | $16.9B | $12.0B |
| FY2024 | $648.1B | $27.0B | $15.5B | $35.7B | $20.6B | $15.1B |
| FY2025 | $681.0B | $29.3B | $19.4B | $36.4B | $23.8B | $12.7B |
| FY2026 | $713.2B | $29.8B | $21.9B | $41.6B | $26.6B | $14.9B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +4.7% (year before +5.1%): steady
- Operating income: +1.6% (year before +8.6%): slowing
- Net income: +12.6% (year before +25.3%): slowing
- Free cash flow: +17.9% (year before -16.3%): accelerating

## Operating figures stated in the filing

- Walmart U.S. comparable sales growth: 3.3% (as of 2026-07-31). "Walmart U.S. comparable sales increased 3.3% and 3.8% for the three and six months ended July 31, 2026, respectively" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart U.S. comparable sales growth: 4.7% (as of 2025-07-31). "Walmart U.S. 3.3 % 4.7 % 0.4 % (0.1) % 3.8 % 3.9 % 0.3 % (0.1) %" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Sam's Club U.S. comparable sales growth: 8.6% (as of 2026-07-31). "Sam's Club U.S. comparable sales increased 8.6% and 7.3% for the three and six months ended July 31, 2026, respectively, with growth in transactions and unit volumes, reflecting strength in grocery and general merchandise." (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Sam's Club U.S. comparable sales growth: 3.3% (as of 2025-07-31). "Sam's Club U.S. 8.6 % 3.3 % 4.2 % (2.6) % 7.3 % 3.1 % 3.2 % (2.6) %" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart U.S. eCommerce contribution to comparable sales: 4.9% (as of 2026-07-31). "Walmart U.S. eCommerce sales positively contributed approximately 4.9% and 5.1% to comparable sales for the three and six months ended July 31, 2026, respectively." (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Sam's Club U.S. eCommerce contribution to comparable sales: 3.1% (as of 2026-07-31). "Sam's Club U.S. eCommerce sales positively contributed approximately 3.1% to comparable sales for both the three and six months ended July 31, 2026, reflecting continued strength in member engagement with omnichannel offerings, such as club-fulfilled delivery." (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Total stores and clubs: 11,000 units (as of 2026-07-31). "Unit counts at period end 11,000 10,797 11,000 10,797" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Total stores and clubs: 10,797 units (as of 2025-07-31). "Unit counts at period end 11,000 10,797 11,000 10,797" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart U.S. stores: 4,615 stores (as of 2026-07-31). "Unit counts at period end 4,615 4,606 4,615 4,606" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart U.S. stores: 4,606 stores (as of 2025-07-31). "Unit counts at period end 4,615 4,606 4,615 4,606" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart International stores: 5,783 stores (as of 2026-07-31). "Unit counts at period end 5,783 5,591 5,783 5,591" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Walmart International stores: 5,591 stores (as of 2025-07-31). "Unit counts at period end 5,783 5,591 5,783 5,591" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Sam's Club U.S. clubs: 602 clubs (as of 2026-07-31). "Unit counts at period end 602 600 602 600" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)
- Sam's Club U.S. clubs: 600 clubs (as of 2025-07-31). "Unit counts at period end 602 600 602 600" (Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations)

## Key insights

### Walmart U.S. earns 86.5% of profit on 67.0% of revenue

The home segment's 6.4% operating margin beats International's 4.0% and Sam's Club's 2.6%, so revenue shifting abroad weighs on the company average.

Walmart U.S. brought in $125.9B of $187.9B in total revenues, 67.0%, and earned $8.12B of the $9.38B in operating income, 86.5%. Walmart International earned $1.44B on $35.6B of revenue, 15.3% of operating income on 19.0% of revenue. Sam's Club U.S. earned $678M on $26.4B, 7.2% of operating income on 14.0% of revenue. The segment shares add to more than the whole because corporate and support costs sit outside the segments. _(from the filing)_
The mix moved toward the lower-margin segments. Walmart International revenue grew 12.8% and its share of revenue rose 1.15 points, while Walmart U.S. grew 3.6% and its share fell 1.51 points. The filing says currency exchange movements added to International's sales, and that International's operating expenses fell as a share of sales through disciplined cost controls and format mix shifts. _(from the filing)_
Sam's Club's ratio also moves with fuel. The filing says higher fuel prices and volumes lifted its sales this quarter, and it publishes a separate view excluding fuel because fuel price volatility moves the segment's results. Its revenue growth and margin are therefore not a clean read on the club's merchandise business. _(from the filing)_
Analysis: the segment growing fastest is not the one that earns the most per dollar of sales. Unless International's margin rises, a revenue mix tilting abroad makes the company-wide operating margin harder to lift and keeps the result tied closely to the U.S. store base. This is arithmetic on the reported mix, not a forecast. _(analysis)_

### Operating profit rose 28.8% while net profit fell 9.4%

Investment marks swung from a $2.7B gain to a $1.2B loss, so the business improved while diluted earnings per share fell to $0.80 from $0.88.

Operating income rose to $9.38B from $7.29B, up 28.8%. Below it, other (gains) and losses turned from a $2.7B gain to a $1.2B loss, which the filing says came mostly from changes in the fair value of equity and other investments driven by their underlying stock prices. Income before income taxes fell 14.0%, to $8.01B from $9.32B, and net income attributable to Walmart fell to $6.37B from $7.03B. _(from the filing)_
Two lines softened the fall. The effective tax rate was 18.5%, against 23.3% a year earlier, and interest on debt was $137M, against $651M. The filing attributes the lower tax rate primarily to changes in unrecognized tax benefits, and records a reduction of interest expense from the same cause. _(from the filing)_
Analysis: neither the investment marks nor the tax-related benefits describe how the stores, clubs and websites performed, and neither follows a schedule. For this quarter, operating income and the segment margins are the cleaner read on the business; net income mixes it with the share prices of companies Walmart holds stakes in. _(analysis)_

### Online sales carried all of Walmart U.S. comparable growth

eCommerce contributed about 4.9% to Walmart U.S. comparable sales that rose 3.3% in total, so sales outside eCommerce at existing stores slipped.

Walmart U.S. comparable sales rose 3.3%, against 4.7% a year earlier, and eCommerce contributed approximately 4.9% to them. The filing credits growth in transactions and average ticket and strength in grocery, and says the online growth reflects Walmart+ member engagement and was primarily driven by store-fulfilled delivery. _(from the filing)_
The filing names one drag: health and wellness sales fell, primarily because of maximum fair price regulation on certain prescription drugs that took effect in January. The store base was nearly flat, at 4,615 Walmart U.S. stores against 4,606 a year earlier. _(from the filing)_
Analysis: the stores are increasingly where online orders are picked and dispatched, not only where customers shop. The filing points to drug pricing for the weakness outside eCommerce; it does not say how much reflects trips moving from the aisle to the app. If that shift is part of it, store productivity is better measured by orders fulfilled than by visits. _(analysis)_

### Capital spending more than doubled as free cash flow fell

Annual capital spending rose to $26.6B in FY2026 from $10.3B in FY2019, so free cash flow fell to $14.9B from $17.4B despite higher sales.

In FY2026 capital spending was $26.6B against operating cash flow of $41.6B. In FY2019 it was $10.3B against $27.8B. Over the same years revenue rose to $713.2B from $514.4B and operating income to $29.8B from $22.0B, while free cash flow fell to $14.9B from $17.4B. Capital spending went from 2.0% of revenue to 3.7%, so it grew faster than both sales and operating cash. _(from the filing)_
This quarter capital spending was $7.50B, about half of operating cash flow of $14.97B and 4.0% of revenue, against $6.42B a year earlier. The filing says the majority of capital goes to higher-return areas focused on automation, such as eCommerce, the supply chain, and store and club remodels, and that the six-month decline in free cash flow came from higher capital expenditures to support its omnichannel growth strategy. _(from the filing)_
Analysis: Walmart is spending more of its cash on automation and fulfillment ahead of any payback in free cash flow. The filing reports a slightly higher return on investment over the trailing twelve months, and says that measure can fluctuate as long-term initiatives are balanced against short-term impacts. Whether operating cash grows faster than the spending is the test of the program. _(analysis)_

### Competitive edge

- **Membership and other income equals 19.6% of operating profit** The $1.84B line is 1.0% of revenue but equal to 19.6% of operating income, and it grew 11.2%, faster than net sales.
- **Operating cash ran 2.35 times net income** Walmart collects from shoppers before it pays many suppliers, so operations generated $14.97B of cash this quarter against $6.37B of net income.
- **Revenue grew 38.6% since FY2019, the operating margin barely moved** Operating income was 4.3% of revenue in FY2019 and 4.2% in FY2026, consistent with the filing's model of everyday low prices funded by everyday low costs.

### What to watch

- **A one-time tariff refund lifted the margin** The 5.0% operating margin is the highest of the last eight quarters, and the filing attributes the gross margin gain primarily to tariff refunds.
- **Operating expenses grew faster than sales** Operating expenses rose 6.44% against 5.9% net sales growth, missing the company's own expense leverage test, which the filing ties to claims, depreciation and healthcare.
- **Several legal matters carry no estimate of loss** Opioid cases, Asda equal pay claims, a money transfer review, Spark Driver inquiries and Flipkart proceedings carry losses the filing says it cannot estimate.

## Operating income by segment

- Walmart U.S.: $8.1B (86.5% of operating income)
- Walmart International: $1.4B (15.3% of operating income)
- Sam's Club U.S.: $678.0M (7.2% of operating income)

## Investor view

**Tariff refunds lifted Walmart's operating income 28.8% in a quarter when investment losses pulled net income lower**

### How it makes money

Walmart earns almost all of its revenue by selling goods. Net sales were $186.1B of $187.9B in total revenues this quarter. After $138.8B in cost of sales, gross profit was $49.1B, or 26.1% of total revenues. Operating expenses took $39.75B, 21.2% of revenues, which left operating income of $9.38B, a 5.0% operating margin. _(from the filing)_
Walmart U.S. is the engine. It brought in $125.9B, 67.0% of total revenues, and $8.12B of operating income, 86.5% of the company total. Walmart International contributed $35.6B of revenue and $1.44B of operating income, and Sam's Club U.S. $26.4B and $678M. The segments add up to more than the company total because corporate and support costs are held outside them. _(from the filing)_
Margins differ sharply by format. Operating income was 6.4% of revenues at Walmart U.S., 4.0% at Walmart International and 2.6% at Sam's Club U.S., the warehouse club format. _(from the filing)_
A second, smaller stream sits on top of the goods. Membership and other income, which the filing says includes membership fees as well as rental, recycling and gift card breakage income, was $1.84B: about 1.0% of total revenues, but equal to 19.6% of operating income. The filing also credits gross profit to "continued growth in higher margin businesses, including advertising." _(from the filing)_

### What shifted

Gross profit grew 10.1% against revenue growth of 5.9%, a gain of 0.99 points of revenue. The filing attributes it primarily to tariff refunds, recorded as a reduction to cost of sales, partly offset by price investments and higher fuel costs in the supply chain. Operating income rose 28.8% to $9.38B from $7.29B a year earlier. _(from the filing)_
Operating expenses rose 6.4%, slightly faster than revenue, and their share of revenue rose 0.1 points. The filing names three causes: higher self-insured general liability claims expense, more depreciation from its capital investments, and higher associate healthcare costs from increased enrollment and medical cost inflation. _(from the filing)_
The mix moved abroad. Walmart International revenue grew 12.8% and its share of revenue rose 1.15 points to 19.0%, with help from currency movements, while Walmart U.S. grew 3.6% and its share fell 1.51 points. Walmart U.S. comparable sales rose 3.3%, against 4.7% a year earlier, and the filing says health and wellness sales fell because of maximum fair price regulation on certain prescription drugs. _(from the filing)_
Sam's Club U.S. accelerated. Its revenue grew 8.7% and comparable sales rose 8.6%, against 3.3% a year earlier. The filing credits growth in transactions and unit volumes in grocery and general merchandise, and higher fuel sales from higher fuel prices and volumes. eCommerce contributed about 3.1% to its comparable sales. _(from the filing)_
Below operating income the quarter went the other way. Other (gains) and losses swung to a $1.2B loss from a $2.7B gain, mostly fair value changes in equity investments. Income before income taxes fell 14.0%, and net income attributable to Walmart fell to $6.37B from $7.03B, or $0.80 per diluted share against $0.88. A lower tax rate, 18.5% against 23.3%, softened the fall, and interest on debt dropped to $137M from $651M, which the filing ties in part to changes in unrecognized tax benefits. _(from the filing)_

### Risks in the filing

The quarterly report says there is no material change to the risk factors in the annual report. Its management discussion names the sources of uncertainty directly: tariffs and trade restrictions, including tariff refunds; inflation; currency swings; shifts in the economy and consumer confidence; employment trends; fuel price volatility; and supply chain pressures. _(from the filing)_
The company lists legal matters where it says it cannot reasonably estimate any loss or range of loss: remaining opioid litigation, equal value pay claims against its former UK subsidiary Asda that it partly indemnifies, a Justice Department review of its money transfer services, government inquiries and lawsuits over its Spark Driver delivery platform, an antitrust ruling against its Mexican subsidiary that is under appeal, and foreign investment and antitrust proceedings involving Flipkart in India. _(from the filing)_
Walmart self-insures general liability, workers' compensation, auto, product liability and certain employee healthcare benefits, and the filing warns its exposure would rise if insurance or supplier indemnification fell short. It also notes that a credit rating downgrade could raise borrowing costs, and that some of its cash abroad may not be freely transferable to the U.S. _(from the filing)_
Several of these risks are already in the numbers rather than in the future. Self-insured claims and healthcare costs are two of the three reasons the filing gives for higher operating expenses. Fuel prices moved Sam's Club sales, currency moved International revenue, and the tariff regime moved the gross margin in both directions within a year. _(analysis)_

## Founder view: mechanisms

### Everyday low cost pays for everyday low price

Walmart runs its cost per unit sold below its rivals' and returns most of the saving to customers as lower prices. Lower prices bring more trips, more trips spread fixed costs over more sales, and lower costs fund the next price cut. The filing orders its priorities the same way: growth first, then margin through productivity and mix, then returns. The margin is a chosen rate, not a maximum. _(analysis)_

### Fee and ad income on top of the traffic

Once a retailer owns the shopper's attention, it can sell things that are not goods: memberships such as Walmart+ and Sam's Club, and advertising to the suppliers whose products sit on its shelves and pages. These lines carry little or no cost of goods, so a small revenue stream becomes a large share of profit and can subsidize low prices on the goods themselves. _(analysis)_

### Stores double as delivery warehouses

Walmart fills most online orders from the stores it already runs, so eCommerce grows on buildings, staff and inventory that are already paid for. New capital goes into automation, the supply chain and remodels rather than into new stores. Each store becomes both a place to shop and a local dispatch point close to the customer. _(analysis)_

### Selling the goods before paying for them

A retailer that turns inventory quickly and pays suppliers on standard terms can collect cash from customers before its own bills fall due. Suppliers then finance much of the stock on the shelves, and operating cash flow runs ahead of profit. Walmart describes the result as a working capital deficit that it runs on purpose. _(analysis)_

## Member research

Signed-in members read, on the page: what Walmart's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Walmart 10-Q for the period to 2026-07-31: https://www.sec.gov/Archives/edgar/data/104169/000010416926000154/ (2026-08-28)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02