Walmart Inc.

Company Overview

Business Model: Walmart Inc. operates as a people-led, technology-powered omni-channel retailer, focused on helping customers save money and live better by offering shopping opportunities through retail stores and eCommerce, alongside various service offerings. The Company's strategy emphasizes making daily life easier for busy families, operating with discipline, enhancing its culture, becoming more digital, and leveraging trust as a competitive advantage. This is underpinned by an Everyday Low Price (EDLP) philosophy and a commitment to Everyday Low Cost (EDLC) to pass savings to customers. Walmart Inc. is expanding its global retail ecosystem through offerings such as advertising, marketplace and fulfillment services, and financial services.

Market Position: Walmart Inc. serves approximately 270 million customers weekly across more than 10,750 stores and numerous eCommerce websites in 19 countries. The Company aims to be customers' primary retail destination by seamlessly integrating its eCommerce and retail stores. Walmart U.S. is the largest segment, followed by Walmart International, with Sam's Club U.S. operating as a membership-only club.

Recent Strategic Developments:

• Omni-channel and Digital Expansion: Continued heavy investment in omni-channel and eCommerce innovation, leveraging technology, talent, and expertise to expand assortment and service offerings. Over 8,000 pickup and delivery locations globally.
• Strategic Acquisitions and Divestitures:
  • Acquired VIZIO Holding Corp. for $1.9 billion in December 2024, enhancing eCommerce and digital presence.
  • Sold equity investment in JD.com for net proceeds of $3.6 billion in August 2024.
  • Increased ownership in PhonePe as part of its separation from Flipkart in December 2022.
  • Completed buyout of noncontrolling interest shareholders of Massmart subsidiary in November 2022 and exited operations in certain countries in Africa in December 2022.
  • Sam's Club U.S. launched "Just Go" in fiscal 2025, providing a friction-free exit experience.
• Membership Offerings: Walmart+ membership in the U.S. provides enhanced omni-channel shopping benefits, including unlimited free shipping and delivery, fuel discounts, and mobile Scan & Go. Sam's Club U.S. offers Plus and Club memberships with varying benefits.

Geographic Footprint: Walmart Inc. conducts global operations across the U.S., Africa, Canada, Central America, Chile, China, India, and Mexico.

• Walmart U.S.: Operates in all 50 states, Washington D.C., and Puerto Rico.
• Walmart International: Operates across 18 countries, including wholly-owned subsidiaries in Canada, Chile, China, and Africa (Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Eswatini, Zambia), and majority-owned subsidiaries in India, Mexico, and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua).
• Sam's Club U.S.: Operates in 44 states and Puerto Rico.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 24.1% (FY25) vs. 23.7% (FY24)
• Operating Margin: 4.4% (FY25) vs. 4.2% (FY24)
• Net Margin (attributable to Walmart): 2.9% (FY25) vs. 2.4% (FY24)

Investment in Growth:

• Capital Expenditures: $23.8 billion (FY25) vs. $20.6 billion (FY24). Projected $21 billion to $25 billion for fiscal 2026.
• Strategic Investments:
  • Acquisition of VIZIO Holding Corp. for $1.9 billion (FY25).
  • Net proceeds of $3.6 billion from the sale of JD.com investment (FY25).
  • Paid $3.5 billion to acquire shares from certain Flipkart noncontrolling interest holders and settle PhonePe liability (FY24).
  • Received $0.7 billion from new equity funding rounds for PhonePe (FY24).
  • Buyout of Massmart noncontrolling interest shareholders for $0.4 billion (FY23).
  • Acquisition of Alert Innovation for $0.4 billion (FY23).

Business Segment Analysis

Walmart U.S.

Financial Performance:

• Revenue: $462.4 billion (+4.7% YoY)
• Operating Margin: 5.2% (FY25) vs. 5.0% (FY24)
• Key Growth Drivers: Comparable sales increased 4.8% in fiscal 2025, driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness. eCommerce sales contributed approximately 2.9% to comparable sales, primarily through store-fulfilled pickup and delivery. Membership and other income increased by $0.6 billion, primarily from Walmart+ membership fees and recycling income.

Product Portfolio:

• Grocery: Full line of grocery items, including dry grocery, snacks, dairy, meat, produce, deli, bakery, frozen foods, alcoholic and nonalcoholic beverages, and consumables (health and beauty aids, pet supplies, household chemicals, paper goods, baby products).
• General Merchandise: Entertainment (electronics, toys, seasonal, wireless, video games, movies, music, books), Hardlines (automotive, hardware, paint, sporting goods, outdoor living, stationery), Fashion (apparel, shoes, jewelry, accessories), and Home (housewares, small appliances, bed and bath, furniture, home organization, home furnishings, home decor, fabrics, crafts).
• Health and Wellness: Pharmacy, over-the-counter drugs and other medical products, and optical services.
• Private Brands: Allswell, Athletic Works, bettergoods, Equate, Free Assembly, Freshness Guaranteed, George, Great Value, Holiday Time, Hyper Tough, Mainstays, Marketside, No Boundaries, onn., Ozark Trail, Parent's Choice, Sam's Choice, Scoop, Spring Valley, Time and Tru, Way to Celebrate, Wonder Nation.
• Licensed Brands: Avia, Better Homes & Gardens, Sofia Jeans by Sofia Vergara, The Pioneer Woman.

Market Dynamics: Mass merchandiser providing a convenient and seamless omni-channel experience. Substantially all stores offer same-day pickup and delivery, including express delivery within 90 minutes and in-home delivery. Walmart+ membership enhances shopping benefits. Other offerings include in-house advertising, supply chain and fulfillment capabilities for online marketplace sellers, data analytics, fuel, and financial services (money orders, prepaid access, money transfers, check cashing, bill payment, installment lending).

Walmart International

Financial Performance:

• Revenue: $121.9 billion (+6.3% YoY)
• Operating Margin: 4.5% (FY25) vs. 4.3% (FY24)
• Key Growth Drivers: Positive comparable sales across all international markets, including strength in eCommerce. Improved eCommerce margin and business mix changes contributed to gross profit rate increase. Negative fluctuations in currency exchange rates of $3.2 billion partially offset growth in fiscal 2025.

Product Portfolio:

• Merchandising strategy is similar to U.S. operations in breadth and scope.
• Private Brands: Leverages U.S. private brands (Equate, George, Great Value, Holiday Time, Mainstays, Marketside, Parent's Choice) and market-specific brands (Aurrera, Lider).
• Other Offerings: Building mutually reinforcing businesses in advertising, marketplace and fulfillment services, financial services, and healthcare. Examples include prepaid cards and money transfers in Mexico and Canada, and PhonePe in India (mobile/bill payment, P2P payment, investment, insurance solutions, financial services, advertising). Value-based internet and telephone service in Mexico.

Market Dynamics: Operates various formats, including supercenters, supermarkets, warehouse clubs (including Sam's Club format), and cash and carry. Omni-channel experience integrates retail stores and eCommerce, with pickup and delivery services in most markets. Expanding marketplace offerings unlock fulfillment and advertising services.

Sub-segment Breakdown:

• Mexico and Central America: $52.0 billion revenue (FY25)
• Canada: $23.0 billion revenue (FY25)
• China: $20.0 billion revenue (FY25)
• Other International: $26.9 billion revenue (FY25)

Sam's Club U.S.

Financial Performance:

• Revenue: $90.2 billion (+4.7% YoY)
• Operating Margin: 2.7% (FY25) vs. 2.5% (FY24)
• Key Growth Drivers: Comparable sales increased 4.7% in fiscal 2025, driven by growth in transactions and unit volumes, with strong sales in grocery and health and wellness. eCommerce sales contributed approximately 2.3% to comparable sales, primarily through club-fulfilled curbside pickup and delivery. Membership and other income increased 13.3%, primarily due to growth in membership base and Plus penetration.

Product Portfolio:

• Grocery: Dairy, meat, bakery, deli, produce, dry/chilled/frozen packaged foods, alcoholic and nonalcoholic beverages, floral, snack foods, candy, and consumables (health and beauty aids, paper goods, laundry and home care, baby care, pet supplies).
• General Merchandise: Home, hardlines and seasonal items (home improvement, outdoor living, gardening, furniture, apparel, jewelry, tools, power equipment, housewares, toys, mattresses), and technology and entertainment items (consumer electronics, accessories, software, video games, office supplies, appliances, third-party gift cards).
• Health and Wellness: Pharmacy, optical and hearing services, over-the-counter drugs, and protein and nutrition.
• Fuel and other categories.
• Private Label Brand: Member's Mark continues to expand its assortment.

Market Dynamics: Membership-only club with two options: Plus Membership ($110 annual fee) and Club Membership ($50 annual fee). Omni-channel experience includes curbside pickup, Scan & Go mobile checkout, and Just Go (launched in fiscal 2025).

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $4.5 billion (61.9 million shares) in fiscal 2025. $12.0 billion authorization remained as of January 31, 2025, under the $20.0 billion program approved in November 2022.
• Dividend Payments: $6.7 billion in fiscal 2025.
• Dividend Yield: Not disclosed.
• Future Capital Return Commitments: The Company approved a fiscal 2026 annual dividend of $0.94 per share, an increase from $0.83 per share in fiscal 2025.

Balance Sheet Position:

• Cash and Equivalents: $9.0 billion (FY25)
• Total Debt: $36.0 billion (FY25)
• Net Cash Position: -$27.0 billion (FY25) (Net Debt Position)
• Credit Rating:
  • Standard & Poor's: A-1+ (Commercial Paper), AA (Long-term debt)
  • Moody's Investors Service: P-1 (Commercial Paper), Aa2 (Long-term debt)
  • Fitch Ratings: F1+ (Commercial Paper), AA (Long-term debt)
• Debt Maturity Profile: $2.6 billion due in fiscal 2026, $3.5 billion in fiscal 2027, $1.7 billion in fiscal 2028, $3.3 billion in fiscal 2029, $2.0 billion in fiscal 2030, and $22.9 billion thereafter.

Cash Flow Generation:

• Operating Cash Flow: $36.4 billion (FY25)
• Free Cash Flow: $12.7 billion (FY25)
• Cash Conversion Metrics: The Company generally operates with a working capital deficit, which was $17.1 billion as of January 31, 2025, reflecting efficient cash use, consistent access to capital markets, and shareholder returns.

Operational Excellence

Production & Service Model: Walmart Inc. operates as a people-led, technology-powered omni-channel retailer, continuously striving to improve a customer-centric experience that seamlessly integrates eCommerce and retail stores. The operational philosophy is centered on Everyday Low Price (EDLP) and Everyday Low Cost (EDLC) to deliver value to customers.

Supply Chain Architecture: The Company utilizes a global supply chain sourcing from both U.S. and international suppliers. It maintains efficient networks connecting physical stores, distribution, and fulfillment centers to facilitate the movement of goods.

Key Suppliers & Partners:

• General Suppliers: Purchases merchandise from a wide variety of domestic and international suppliers, including local producers for "fresh" categories.
• Financial Institutions: Engages in supplier financing programs with financial institutions.

Facility Network:

• Manufacturing: Not explicitly detailed, but implies sourcing from various producers globally.
• Research & Development: Not explicitly detailed as separate facilities, but significant investments are made in eCommerce, technology (including AI and generative AI), and automation.
• Distribution:
  • Walmart U.S.: 164 distribution facilities and 29 dedicated eCommerce fulfillment centers.
  • Walmart International: 184 distribution facilities.
  • Sam's Club U.S.: 31 dedicated distribution facilities and 14 dedicated eCommerce fulfillment centers, also utilizing some Walmart U.S. facilities.

Operational Metrics:

• Total Company Units: 10,771 retail units as of January 31, 2025, with 1,052.7 million retail square feet.
• Walmart U.S. Store Formats (as of Jan 31, 2025):
  • Supercenters: 3,559 units (average 178,000 sq ft)
  • Discount stores: 355 units (average 105,000 sq ft)
  • Neighborhood Markets and other small formats: 691 units (average 42,000 sq ft)
• Walmart International Store Formats (as of Jan 31, 2025):
  • Retail units: 5,230 units (ranging from 1,400 to 186,000 sq ft)
  • Wholesale units: 336 units (ranging from 25,000 to 158,000 sq ft)
• Sam's Club U.S. Club Formats (as of Jan 31, 2025):
  • Warehouse clubs: 600 units (average 134,000 sq ft)
• Pickup and Delivery Locations: Over 8,000 globally, with approximately 2,900 in Walmart International.

Market Access & Customer Relationships

Go-to-Market Strategy: Walmart Inc. employs an omni-channel business model to serve customers and members through integrated physical and digital experiences. This includes increasing comparable store and club sales, growing memberships, and accelerating eCommerce sales.

Distribution Channels:

• Direct Sales: Operates retail stores, wholesale clubs, and eCommerce websites (walmart.com, samsclub.com, walmart.com.mx, walmart.ca, flipkart.com) and mobile applications.
• Digital Platforms: Leverages digital platforms for online sales, pickup, delivery, and other omni-channel services.

Customer Portfolio:

• Customer Base: Serves approximately 270 million customers weekly.
• Membership Programs: Walmart+ in the U.S. and Sam's Club memberships (Plus and Club) are key to customer loyalty and engagement.

Geographic Revenue Distribution:

• U.S. operations: 81.9% of total revenue (FY25)
• Non-U.S. operations: 18.1% of total revenue (FY25)
  • Mexico and Central America: $52.0 billion (FY25)
  • Canada: $23.0 billion (FY25)
  • China: $20.0 billion (FY25)
  • Other International: $26.9 billion (FY25)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The retail industry is highly competitive, rapidly evolving, and characterized by increasing consumer embrace of digital shopping experiences. New business models and well-funded competitors intensify competition. Price transparency, product assortment, customer experience, convenience, and delivery speed/cost are paramount to customers.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Walmart Inc. competes with a broad range of local, regional, national, and global physical, eCommerce, and omni-channel retailers, including discount, department, drug, dollar, variety, and specialty stores, warehouse clubs, supermarkets, gasoline stations, and social commerce platforms. Competition also extends to companies offering digital advertising, data analytics/insights, fulfillment and delivery services, health and wellness, and financial services.

Emerging Competitive Threats: The Company faces threats from new entrants, disruptive technologies, and alternative solutions, particularly from newer or smaller businesses that may innovate more rapidly in eCommerce and internet-based sectors.

Competitive Response Strategy: Walmart Inc. maintains its competitive advantage through:

• EDLP: Pricing philosophy offering consistently low prices.
• EDLC: Commitment to expense control to enable price leadership.
• Omni-channel Offerings: Expanding pickup and delivery services to enhance convenience.
• Ecosystem Expansion: Diversifying into higher-margin areas such as digital advertising, marketplace and fulfillment services, health and wellness, and financial services.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Omni-channel Execution: Failure to successfully execute the omni-channel strategy and realize benefits from eCommerce and technology investments could adversely affect market position, net sales, and financial performance.
• Consumer Trends: Inability to timely identify or effectively respond to changing consumer trends, shopping patterns, tastes, and preferences could negatively impact reputation, customer relationships, demand, market share, and business growth.
• Macroeconomic Factors: General economic conditions (inflation, deflation, interest rates, energy prices, unemployment, disposable income, credit availability, debt levels, currency exchange rates, tax rates, healthcare laws, tariffs, trade barriers) can adversely affect consumer demand, product mix, net sales, operating income, and inventory management.

Technology Disruption:

• AI and Generative AI: Increasing use of AI and generative AI technologies introduces operational and legal complexities, potential for elevated governmental scrutiny, litigation, and data privacy risks in a disparate regulatory environment.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Risks associated with suppliers include political and economic instability in sourcing countries, financial instability of suppliers, failure to meet standards, labor problems, raw material availability, extreme weather, merchandise safety/quality issues, and disruptions in transportation (e.g., Red Sea, Panama Canal).
• Capacity Constraints: Failure to predict customer demand or optimize distribution and fulfillment centers could lead to excess/insufficient inventory, service interruptions, and increased costs.

Quality & Safety:

• Product Quality/Safety: Failure of products (both Company-sourced and third-party marketplace) to meet customer expectations or regulatory standards could result in customer loss, liability for injuries, regulatory enforcement, and reputational harm.
• Third-Party Marketplace Liability: Unsettled law regarding retailer responsibility for marketplace transactions creates additional liability risk for intellectual property or product liability claims.

System Disruptions:

• Information Systems: Business-critical information systems are vulnerable to damage or interruption from power outages, telecommunications failures, cyberattacks (viruses, ransomware, denial-of-service, phishing), security incidents, catastrophic events, and human error, potentially disrupting operations and data integrity.
• Technology-Based Systems: Ineffective functioning of online shopping platforms and delivery systems could materially adversely affect operating results and global omni-channel growth.

Data Privacy & Security:

• Cybersecurity Threats: Rapidly evolving cyber threats (malware, ransomware, phishing, nation-state actors, criminal organizations, insiders) pose risks to information systems and data (personal, payment, protected health information), potentially leading to data breaches, litigation, fines, penalties, reputational damage, and substantial remediation costs.
• AI-driven Fraud: Increasing sophistication of AI technologies poses a greater risk of identity fraud.

Health & Wellness Business:

• Reimbursement & Contracts: Changes in third-party reimbursements, payer mix, drug formularies, network arrangements, drug prices, and regulatory environment (e.g., Medicare Part D, Medicaid, Inflation Reduction Act) could adversely affect net sales, gross margin, cash flows, and liquidity.

Labor & Workforce:

• Talent Management: Failure to attract and retain qualified associates, increases in wage and benefit costs, and changes in labor laws could materially adversely affect financial performance.

Independent Contractors:

• Misconduct & Liability: Illegal or inappropriate activity by independent contractors or third-party service providers could expose the Company to liability, negative publicity, and reputational harm.

Financial & Regulatory Risks

Foreign Exchange:

• Currency Fluctuations: Fluctuations in currency exchange rates can materially adversely affect financial performance and reported results of operations, particularly for Walmart International.

Credit & Liquidity:

• Market Expectations: Failure to meet market expectations for financial performance could adversely affect stock price and volatility.
• Credit Rating Downgrade: Any downgrade of credit ratings could increase borrowing costs or impair access to capital and credit markets.

Regulatory & Compliance:

• International Operations: Operations in foreign countries are subject to diverse legislative, judicial, accounting, legal, regulatory, tax, political, and economic risks (e.g., foreign ownership restrictions, antitrust, local labor laws, anti-money laundering, trade policies, data protection).
• Tax & Trade Laws: Significant changes in tax and trade policies (tariffs, trade barriers, import restrictions) could increase merchandise costs and adversely affect financial performance.
• Industry-Specific Regulations: Compliance with extensive regulations in health and wellness (DEA, FDA, HIPAA), financial services (anti-money laundering, consumer protection), and general business (competition, environmental, consumer protection, data privacy, ESG) is complex and non-compliance could lead to fines, sanctions, and reputational damage.
• VIZIO Acquisition: Ownership of VIZIO Holding Corp. introduces new compliance obligations related to consumer data collection and use, subject to the VIZIO Order until 2037.

Legal Proceedings:

• Opioid-Related Litigation: Ongoing multidistrict litigation (MDL No. 2804), U.S. Department of Justice civil litigation, securities class actions, shareholder derivative litigation, and False Claims Act litigation related to controlled substance dispensing and distribution practices.
• Asda Equal Value Claims: Indemnification obligation for ongoing equal value claims in the UK related to Asda.
• Money Transfer Agent Services: Litigation with the Federal Trade Commission and investigation by the U.S. Department of Justice regarding consumer fraud prevention and anti-money laundering compliance.
• Driver Platform Matters: Lawsuit by the Consumer Financial Protection Bureau and other governmental investigations regarding independent contractor classification and payment practices for the Spark platform.
• Mexico Antitrust Matter: Quasi-judicial administrative process initiated by COFECE against Walmex's subsidiary for alleged monopolistic practices.
• India Foreign Direct Investment & Antitrust Matters: Directorate of Enforcement notice and requests to Flipkart regarding Foreign Direct Investment rules, and Competition Commission of India investigation into Flipkart subsidiaries for alleged competition law violations.

Geopolitical & External Risks

Geopolitical Exposure:

• Catastrophic Events: Natural disasters, extreme weather (exacerbated by climate change), geopolitical tensions (e.g., Ukraine, Israel, Red Sea, Panama Canal), war, civil unrest, terrorist attacks, and shrink/theft can materially adversely affect operations and financial performance.
• Trade Relations: Political uncertainty surrounding trade and international disputes could negatively impact consumer confidence, spending, and the Company's reputation.

Innovation & Technology Leadership

Research & Development Focus: Walmart Inc. is making increasing investments in eCommerce, technology (including artificial intelligence "AI" and generative AI), automation, and supply chain enhancements. The focus is on improving associate productivity, efficiency, engagement, and performance through consumer-grade digital tools.

Core Technology Areas:

• Artificial Intelligence (AI) and Generative AI: Actively investing in and integrating these evolving technologies to enhance customer shopping experiences, improve associate work, and increase efficiencies in supply chain, operations, management functions, and talent recruitment/development.
• Omni-channel Innovation: Continuous improvement of a customer-centric experience that seamlessly integrates eCommerce and retail stores.

Intellectual Property Portfolio: The Company considers its trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, and proprietary technologies vital to its success. It relies on legal protections and confidentiality agreements, and has registered or applied for numerous U.S. and international intellectual property rights.

Licensing Programs: Walmart Inc. has licensed, and expects to continue licensing, certain proprietary rights to third parties.

Technology Partnerships: Engages in strategic alliances and business relationships to expand its business, and utilizes third-party service providers for various technology systems and services.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company emphasizes the importance of successfully executing organizational changes, including management transitions within senior leadership, and effectively motivating and retaining associates as critical to business success.

Board Composition: The Board of Directors has primary responsibility for overseeing risk management, with the Audit Committee specifically delegated oversight for information systems, information security, data privacy, and cybersecurity. Several Board members, including Audit Committee members, possess backgrounds or professional experience in risk management, digital platforms, information technology, or cybersecurity.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 2.1 million associates worldwide as of January 31, 2025.
• Geographic Distribution: Approximately 1.6 million associates in the U.S. and 0.5 million internationally.
• Skill Mix: In the U.S., approximately 92% of associates are hourly, and approximately 68% are full-time.

Talent Management:

• Acquisition & Retention: Focused on attracting and retaining a large number of qualified associates globally, investing significant resources in training and motivation.
• Employee Value Proposition: Offers competitive wages and a broad range of benefits, including 401(k) match, family building benefits, maternity leave, fertility benefits, paid parental leave, paid time off, Associate Stock Purchase Plan match, life insurance, medical coverage (with free virtual visits), behavioral and mental health services, a Walmart discount card or Sam's Club membership, and predictable scheduling.

Diversity & Development:

• Diversity Metrics: 51% of worldwide associates are women. In the U.S., 51% of associates are people of color. The Company reviews fair-pay practices and aims to cultivate a culture of belonging.
• Development Programs: Provides growth, development, and learning opportunities through programs like Walmart Academy (on-the-job retail skills, leadership, well-being training) and Live Better U ("LBU") (access to educational opportunities for eligible U.S. and Puerto Rico associates for high school diplomas, certificates, and college degrees).
• Culture & Engagement: Focuses on creating a workplace where associates feel seen, supported, and connected, gathering feedback through various channels including in-person dialogue, leadership visits, surveys, and confidential ethics channels.

Environmental & Social Impact

Environmental Commitments: Walmart Inc.'s sustainability efforts aim to create and preserve long-term business value by increasing operational efficiency and resilience, promoting supply surety, sourcing responsibly, and enhancing product assortment.

Climate Strategy: Efforts include procuring renewable sources of energy and reducing greenhouse gas emissions.

Supply Chain Sustainability: The Company aims to respect the dignity of people throughout its supply chain, create economic opportunity for workers, and sell safer, healthier products. Initiatives include enhancing the sustainability of product supply chains, preserving and restoring nature, reducing waste, and responsible sourcing.

Social Impact Initiatives:

• Opportunity: Promotes economic opportunity for associates, suppliers, and communities, offering career pathways and cultivating a culture of belonging.
• Community: Strengthens communities by providing access to affordable goods and services, contributing to economic vitality through jobs and local supplier investments, and supporting local organizations.
• Ethics and Integrity: Fosters a culture of trust through ethics and compliance, governance and oversight, responsible public policy engagement, responsible data and technology use, and respect for human rights.

Business Cyclicality & Seasonality

Demand Patterns: The business experiences seasonality, varying by country due to national and religious holidays, festivals, customs, and weather patterns. Historically, the highest sales volume for all segments occurs in the fourth quarter of the fiscal year.

Economic Sensitivity: The Company's operating results are influenced by various factors, including catastrophic events, weather, climate change, global health epidemics/pandemics, competitive pressures, consumer disposable income, debt levels, buying patterns, credit availability, supply chain disruptions, inventory management, cost and availability of goods, currency exchange rate fluctuations, customer preferences, inflation, deflation, fuel and energy prices, general economic conditions, insurance costs, interest rates, labor availability and costs, tax rates, tariffs, cybersecurity attacks, and unemployment.

Planning & Forecasting: The Company employs pricing and merchandising strategies in response to cost increases, including absorbing costs, reducing prices in certain categories, focusing on opening price points for food, working with suppliers to reduce costs, focusing on private label brands, and securing ocean carrier and container capacity.

Regulatory Environment & Compliance

Regulatory Framework: Walmart Inc. operates in complex regulated environments across the U.S. and its international markets, subject to diverse laws, rules, and regulations.

Industry-Specific Regulations:

• Health and Wellness: Subject to federal, state, and local laws regarding licensing, reimbursement, pharmacy registration, controlled substances, data privacy (HIPAA), billing, fraud and abuse, and practitioner qualifications. Regulatory bodies include the DEA, U.S. Food and Drug Administration, and state authorities.
• Financial Services: Offerings through financial service partners and the ONE fintech venture require compliance with laws and regulations related to fraud prevention, anti-money laundering, sanctions, privacy, information security, and consumer protection.
• General Business: Subject to laws concerning competition and antitrust, environmental protection, health and safety, food and drug safety, consumer protection, trade policies, data privacy (CCPA, GDPR, PIPL), labor and employment, and ESG matters.

Trade & Export Controls: The Company is affected by U.S. and international trade policies, tariffs, trade barriers, export/import restrictions, and sanctions laws, which can increase costs and disrupt operations.

Legal Proceedings: Walmart Inc. is involved in numerous material legal proceedings and regulatory matters:

• Opioid-Related Litigation: Includes the In re National Prescription Opiate Litigation (MDL No. 2804), a civil complaint by the U.S. Department of Justice, securities class actions, shareholder derivative litigation, and False Claims Act litigation. The Company accrued $3.3 billion in fiscal 2023 for certain opioid-related settlements, which has been fully paid as of January 31, 2025.
• Asda Equal Value Claims: Indemnification obligation for ongoing equal value claims in the United Kingdom.
• Money Transfer Agent Services Matters: Litigation with the Federal Trade Commission and an investigation by the U.S. Department of Justice regarding consumer fraud prevention and anti-money laundering compliance.
• Driver Platform Matters: A lawsuit by the Consumer Financial Protection Bureau and other governmental investigations concerning the independent contractor classification of drivers on the Spark platform.
• Mexico Antitrust Matter: A quasi-judicial administrative process initiated by the Comisión Federal de Competencia Económica of México (COFECE) against Walmex's subsidiary, resulting in a monetary penalty and non-structural conduct measures, which Walmex is appealing.
• India Foreign Direct Investment Matters: Show cause notice and requests from the Directorate of Enforcement in India to Flipkart regarding alleged violations of Foreign Direct Investment rules.
• India Antitrust Matter: An investigation by the Competition Commission of India into certain Flipkart subsidiaries for alleged competition law violations.
• Environmental Matters: A Finding of Violation from the U.S. Environmental Protection Agency (EPA) regarding the Company's refrigeration leak detection and repair program.

Data Privacy: The Company faces a rapidly transforming regulatory landscape for data privacy and protection, including the California Consumer Privacy Act (CCPA), Illinois Biometric Information Privacy Act, European Union's General Data Protection Regulation (GDPR), United Kingdom's General Data Protection Regulation, and China's Personal Information Protection Act (PIPL). The acquisition of VIZIO Holding Corp. introduces additional compliance obligations related to consumer viewing data under the VIZIO Order.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 23.4% (FY25) vs. 25.5% (FY24) vs. 33.6% (FY23). The decrease in fiscal 2025 was primarily due to the tax impact on changes in fair value of investments.
• Geographic Tax Planning: Utilizes intercompany financing arrangements to optimize cash availability and repatriates foreign earnings, which are generally free of U.S. federal tax but may incur other taxes.
• Tax Reform Impact: Subject to the Tax Cuts and Jobs Act of 2017 and the OECD's Pillar Two initiative, which introduced a 15% global minimum tax effective January 1, 2024, in many jurisdictions.

Uncertain Tax Positions: As of January 31, 2025, the Company had $3.8 billion in gross unrecognized tax benefits related to continuing operations, with $2.0 billion affecting the effective income tax rate.

Insurance & Risk Transfer

Risk Management Framework: Walmart Inc. self-insures various risks, including workers' compensation, general liability, auto liability, product liability, and certain employee-related healthcare benefits. It maintains insurance coverage with varying limits and retentions, including stop-loss insurance for certain liabilities, to limit exposure.

Risk Transfer Mechanisms: The Company uses derivatives, such as interest rate swaps and currency swaps, for hedging purposes to manage exposure to changes in interest and currency exchange rates. It also has indemnification obligations for legal commitments related to divested businesses and certain business customers.