Walmart Inc. (WMT) operates a worldwide network of retail stores as well as an e-commerce business. The company is known for its "everyday low prices" strategy in selling a wide variety of merchandise, including home goods, apparel, electronics, food, and more. The company operates in 24 countries, with roughly 10,500 stores and e-commerce sites under 48 banners. It employs more than 2.2 million people, with the large majority of employees based in the U.S. Walmart's competitors include both traditional retailers such as Target Corp. (TGT) and e-commerce businesses like Amazon.com Inc. (AMZN).
- Walmart is a global retailer selling a wide variety of merchandise at low prices at 10,500 stores and on its e-commerce sites.
- Walmart U.S. is the largest, fastest growing segment measured by operating income growth.
- The company plans to spend $14 billion in FY 2022 to add supply chain capacity and automation to meet rising demand.
Walmart reported consolidated net loss of $2.0 billion for Q4 FY 2021, ended January 31, 2021. Operating income for the period, however, was $5.5 billion, with total revenue of $152.1 billion for the quarter. Operating income increased by 3.1% year-over-year (YOY) for Q4 FY 2021 as total revenue increased by 7.3%. The Q4 net loss was partly due to a $1.4 billion provision for income taxes, and $1.1 billion in costs related to the COVID-19 pandemic during Q4 FY 2021.
Walmart's Business Segments
Walmart divides its operations into three reportable segments: Walmart U.S., Walmart International, and Sam's Club. The first two of these segments represent Walmart-branded stores and products on a geographical basis, while the third represents the Sam's Club warehouse store.
Walmart only provides segment profits measured by operating income, which is a profit metric that excludes several expenses, such as taxes and interest on loans, that are included in overall profit, called net income. Walmart reported operating income for Q4 FY 2021 of $5.5 billion, which includes a loss of $1.0 billion attributed to "corporate and support."
Besides the three segments represented below, Walmart also reported $1.1 billion of revenue for Q4 FY 2021 under the category "membership and other income."
Walmart U.S. is by far the largest of the company's segments. It represents Walmart stores in the U.S., including Washington D.C. and Puerto Rico. This segment includes both "Walmart" and "Walmart Neighborhood Market" stores, as well as multiple e-commerce brands.
Walmart U.S. reported operating income of $5.2 billion on $99.6 billion in net sales in Q4 FY 2021. This represents 79.3% of the company's operating income and 65.5% of its net sales for the quarter. Walmart U.S. operating income increased by 17.4% YOY in Q4 FY 2021, making it by far the company's fastest-growing segment measured by operating income. Net sales increased 7.9% YOY.
Walmart International includes Walmart's operations outside of the U.S. The company has wholly-owned subsidiaries in Africa, Asia, the U.K., Central America, and elsewhere around the world. Walmart International includes supercenters, supermarkets, hypermarkets, warehouse clubs, and e-commerce sites.
Walmart International reported operating income of $964 million on net sales of $34.9 billion for Q4 FY 2021. This represents 14.8% of the company's operating income and 22.9% of its net sales for the quarter. Walmart International operating income decreased 12.8% YOY for Q4 FY 2021, the only segment to post a YOY decline in this area. Net sales climbed 5.5% YOY, the slowest pace of growth among Walmart segments.
Sam's Club is a membership-only warehouse club that operates across most of the U.S. Unlike the other two segments, membership income is a major contributor to this segment's operating income. Sam's Club also includes e-commerce sales through samsclub.com.
Sam's Club reported operating income of $389 million on net sales of $16.5 billion for Q4 FY 2021. This represents 6.0% of the company's operating income and 10.9% of its net sales for the quarter. Sam's Club operating income grew by 1.3% YOY and net sales climbed by 8.1% YOY for Q4 FY 2021. This represented the fastest net sales growth of any Walmart segment, though the Walmart U.S. segment was a close second.
Walmart's Recent Developments
While the pandemic has imposed higher costs on Walmart, it also has accelerated e-commerce growth as millions of people shelter and work at home. In Q4 2020, e-commerce sales grew 69% YOY at Walmart U.S. and 42% YOY at Sam's Club.
Walmart is accelerating its investments to drive future sales and earnings growth. The company plans to spend $14 billion in the 2022 fiscal year on automation and its supply chain to improve its distribution capability. Walmart will also raise the Walmart associate's average wage to above $15 per hour in the U.S.