How Walmart Makes Money

Walmart U.S. is the company's biggest generator of revenue and profits

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 20 countries, with roughly 10,500 stores, clubs, and e-commerce sites. It employs approximately 2.1 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).

Key Takeaways

  • 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's International segment was the fastest-growing segment in Q1 FY 2024.
  • The company raised its wages for approximately 7,000 pharmacists and opticians in 2023.
  • Walmart announced it was opening 70 new specialty pharmacies across the U.S. in order to specifically help those with HIV.

Walmart's Financials

Walmart announced in May 2023 financial results for Q1 of its 2024 fiscal year (FY), the three-month period ending April 30, 2023. The company posted net income attributable to its shareholders of $1.67 billion, a decrease of 18.5% year over year (YOY). Revenue rose 7.6% YOY to $152 billion. Operating income, which Walmart uses as a profitability metric for its individual business segments, rose 17.3% YOY to $6.2 billion.

Walmart said that all segments experienced revenue growth with e-commerce net sales up 26%. There was also a strong growth in membership income. The gross profit rate was negatively impacted by unfavorable product mix shifts towards grocery and health and wellness, which have lower margins than general merchandise, which saw a softness in sales.

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. As mentioned above, Walmart reported operating income for Q1 FY 2024 of $6.2 billion, which includes a loss of $366 million attributed to "corporate and support."

Besides the three segments represented below, Walmart also reported $1.3 billion of revenue for Q1 FY 2024 under the category "membership and other income."

Walmart U.S.

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. had net sales of $103.9 billion, making up 68.8% of total sales for Walmart. Sales in this quarter grew 7.2% YOY. The segment reported an operating income of $4.98 billion, an 11.7% YOY increase, accounting for 79.9% of Walmart's total operating income.

Walmart International

Walmart International includes Walmart's operations outside of the U.S. The company has wholly-owned subsidiaries in Africa, Asia, Central America, and elsewhere around the world. Walmart International includes supercenters, supermarkets, hypermarkets, warehouse clubs, and e-commerce sites.

Walmart International had net sales of $26.6 billion, making up 17.6% of the total sales for Walmart. Sales in this quarter grew 12% YOY. The segment reported an operating income of $1.2 billion, a 50.8% YOY increase, accounting for 18.7% of Walmart's total operating income.

Sam's Club

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 had net sales of $20.5 billion, making up 13.6% of total sales for Walmart. Sales in this quarter grew 4.5% YOY. The segment reported an operating income of $458 million, a 0.43% YOY decrease, accounting for 7.3% of Walmart's total operating income.

Walmart's Recent Developments

In May 2023, Walmart announced that it was raising wages for pharmacists and opticians. The company raised wages for approximately 3,700 pharmacists to an average salary of more than $140,000. It also raised wages for approximately 4,000 opticians to an average wage of more than $22.50 an hour.

In June 2023, the company announced that it was opening 70 new HIV-focused Specialty Pharmacies of the Community (SPOC) in locations around the U.S. The reason is to continue helping individuals with HIV who need specialty care.

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Article Sources
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  1. Walmart Inc. "2023 Annual Report," Page 6.

  2. Walmart Inc. "Location Facts."

  3. Walmart Inc. "Form 10-Q for the Quarter Ending April 30, 2023," Page 3.

  4. Walmart Inc. "Financial Presentation. Q1 2024," Pages 3 & 12.

  5. Walmart Inc. "Form 10-Q for the Quarter Ending April 30, 2023," Page 15.

  6. Walmart Inc. "Form 10-Q for the Quarter Ending April 30, 2023," Page 14.

  7. Walmart Inc. "Walmart Raising Wages, Investing in Careers for More Than 7,000 Opticians and Pharmacists."

  8. Walmart Inc. "Walmart Advances Promise to Deliver Custom Care for HIV Community."

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