Walmart

Membership and other income was $1.84B against $1.65B a year earlier, up 11.2%, while net sales grew 5.9%. The filing attributes the increase primarily to strong growth in membership income globally, including double-digit growth in Walmart+ membership fee revenue and growth in the Sam's Club member base and Plus penetration. The line also includes rental, recycling and gift card breakage income.¹

Sam's Club U.S. raised its annual membership fees at the start of this quarter. The filing says membership fees are deferred and recognized evenly over the one-year membership term, so a fee increase reaches reported income gradually as members renew.¹

AnalysisAnalysis: this is a comparison, not a margin. The line carries costs of its own, from member benefits to delivery, and the filing reports no profit on it. Its share of operating income fell from 22.7% a year earlier because operating income grew faster this quarter, not because the fees weakened.

Operating cash flow was $14.97B against net income attributable to Walmart of $6.37B. Over FY2026 it was $41.6B against $21.9B, close to double. The filing says the company generally operates with a working capital deficit due to its efficient use of cash in funding operations, consistent access to the capital markets and returns to shareholders.¹

The cash cycle swings with timing. Free cash flow was an outflow of $1.9B in Q1 FY2027 and an inflow of $7.5B this quarter, and the filing ties the six-month change in operating cash to higher operating income, partially offset by the timing of inventory receipts.¹

AnalysisAnalysis: suppliers in effect finance much of the inventory, which lets a low-margin retailer fund heavy capital spending largely from operations. The arrangement depends on fast inventory turns and stable supplier terms; slower-moving stock would absorb cash.

Revenue rose to $713.2B in FY2026 from $514.4B in FY2019, while operating income went to $29.8B from $22.0B, 4.2% and 4.3% of revenue. The filing describes the model as everyday low prices supported by everyday low costs, and ranks its priorities as growth first, then margin through productivity and business mix, then returns.¹

The filing says a significant portion of this quarter's tariff refunds was invested in customer-focused initiatives, primarily through price investment, with continued prioritization of price investment expected through the fiscal year.¹

AnalysisAnalysis: a rival matching Walmart's prices has to match its cost per unit, and that cost depends on the volume the low prices attract. Holding the margin flat is a choice that keeps the volume coming; the advantage holds only while cost and scale stay ahead of competitors.

Gross profit rose 0.99 points to 26.14% of revenue. The filing attributes the gain 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, and says the refunds received represent substantially all of those the company requested.¹

Operating income was 5.0% of revenue, against 4.1% a year earlier and 4.2% in Q1 FY2027. The filing expects continued uncertainty from tariffs and trade restrictions, including tariff refunds, and says less than one third of what it sells in the U.S. is imported, mostly from China, Vietnam, Mexico, India and Canada.¹

AnalysisAnalysis: refunds of this kind are unlikely to recur on this scale, so the quarter likely overstates the underlying margin. The filing does not say how much of the refunds went back into price, so the underlying rate cannot be separated from these figures. Advertising, membership and productivity would need to grow to hold the margin once the refunds are spent.

The filing defines expense leverage as net sales growing faster than operating expenses. This quarter net sales grew 5.9%, to $186.1B, and operating expenses 6.44%, to $39.75B, and their share of revenue rose 0.1 points. The filing names higher self-insured general liability claims expense, influenced by rising costs to resolve claims across retail, more depreciation from capital investments, and higher associate healthcare costs from enrollment and medical cost inflation.¹

Lapping legal charges from a year earlier partially offset the increase, the filing says. Walmart self-insures general liability, workers' compensation, auto, product liability and certain employee healthcare benefits, so these costs land directly in its results.¹

AnalysisAnalysis: none of the three named causes reverses on its own, and depreciation tends to rise as a larger capital program is placed in service. Expense leverage returns only if sales growth outpaces them.

The filing says it cannot reasonably estimate any loss or range of loss for remaining opioid litigation; equal value pay claims against its former UK subsidiary Asda, which it partly indemnifies and whose next hearing phase is scheduled for late November; a Justice Department review of its money transfer services; inquiries and lawsuits over its Spark Driver delivery platform; and foreign investment and antitrust proceedings involving Flipkart in India. An antitrust ruling against its Mexican subsidiary is under appeal.¹

The quarterly report says there is no material change to the risk factors in the annual report, and names the sources of uncertainty for the business: tariffs and trade restrictions, inflation, currency, consumer confidence, employment trends, fuel prices and supply chain pressures.¹

AnalysisAnalysis: because no range of loss is reported, the cost of these matters, if any, is not reflected in the results beyond amounts already accrued. Several of the other named pressures are already visible: fuel moved Sam's Club sales, currency moved International revenue, and tariffs moved the gross margin.