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    WMT
    Earnings call· Jan 2025(Q4 FY25)

    Walmart Inc. WMT

    Feb 20, 2025 Source

    Executive summary

    Walmart Q4 FY25 — Strong Sales & Profit Growth Driven by Omni-Channel and High-Margin Businesses

    Walmart delivered strong Q4 FY25 results, with sales and adjusted operating income exceeding expectations, driven by robust omni-channel execution and growth in higher-margin businesses like advertising and membership. The company continues to invest in price and associates while improving e-commerce profitability and ROI. Management expressed confidence in its strategy and ability to navigate an uncertain macroeconomic environment, projecting accelerated profit growth for FY26 after adjusting for one-off impacts.

    Highlights

    5

    • Consolidated sales grew 5.2% in constant currency for the quarter.

    • Adjusted operating income increased 9.4% in constant currency for the quarter.

    • Global advertising grew 27% to $4.4 billion for the full year FY25.

    • Global membership income grew 21% to $3.8 billion for the full year FY25.

    • Walmart U.S. comp sales increased 4.6%, with e-commerce sales up 20%.

    Concerns

    3

    • Currency was a headwind to reported sales of approximately $3.2 billion (50 bps) for FY25 and $2 billion (120 bps) for Q4.

    • SG&A expenses deleveraged 46 basis points in Q4, primarily due to tech investments, increased variable pay, marketing, utilities, and VIZIO acquisition costs.

    • Mix shift towards grocery and health & wellness and away from general merchandise created margin pressure.

    Guidance & targets

    12
    CategoryTargetConfidence
    Consolidated Net Sales Growth
    approximately 3% to 4%
    high materiality
    High
    Operating Income Growth
    3.5% to 5.5%
    high materiality
    High
    Adjusted EPS
    $2.50 to $2.60
    high materiality
    High
    Currency Headwind to Sales Growth
    approximately 100 basis points
    medium materiality
    Medium
    Currency Headwind to Operating Income Growth
    approximately 150 basis points
    medium materiality
    Medium
    CapEx as % of Sales
    3% and 3.5%
    medium materiality
    High
    Consolidated Net Sales Growth
    3% to 4%
    high materiality
    High
    Operating Income Growth
    0.5% to 2%
    high materiality
    High
    Adjusted EPS
    $0.57 to $0.58
    high materiality
    High
    Currency Headwind to Sales Growth
    approximately 150 basis points
    medium materiality
    Medium
    Currency Headwind to Operating Income Growth
    approximately 250 basis points
    medium materiality
    Medium
    Operating Income Growth (Normalized)
    5% to 7%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Walmart U.S.
    Strong comp sales driven by increased customer transactions in both stores and e-commerce. Ongoing share gains across categories. Improvement in general merchandise for the second consecutive quarter.
    E-commerce sales growth: 20%Grocery growth: mid-single-digitHealth and wellness growth: mid-teensGLP-1 sales contribution to comp: ~0.1%General merchandise comp sales growth: low single-digit
    		—4.6%——
    Walmart International
    Strength in China, Walmex, and Canada. Positive traffic and unit growth across markets. Strong GM sales during festive events. Flipkart's Big Billion Days timing negatively affected YOY sales comparisons.
    E-commerce sales growth (ex-India): >20%Same-day/next-day items delivered: >2.3 billionSame-day/next-day items delivered growth: >30%Items delivered in under 3 hours: ~45% of same-day/next-day
    		—5.7%——
    Sam's Club U.S.
    Strong growth in transaction and unit volumes, including increased penetration of Member's Mark. New perks like express delivery and elimination of curbside pickup fees resonated with members. Ranked #1 in customer satisfaction.
    E-commerce growth: 24%Club fulfilled delivery growth: triple-digitMembership count: all-time highsRenewal rates: up hundreds of basis pointsAssociate turnover: down 1,700 basis points YoY
    		—6.8%——

    Operational metrics

    37
    Global advertising revenue
    $4.4 billionup 27%
    FY25

    Over the last year, global advertising grew 27% to about $4.4 billion.

    Walmart U.S. Marketplace revenue growth
    37%
    FY25

    Walmart U.S. Marketplace revenue grew 37% with nearly 45% of orders fulfilled by WFS.

    Global membership income
    $3.8 billionup 21%
    FY25

    And lastly, global membership income grew 21% to about $3.8 billion.

    Consolidated revenue growth
    5.6%
    FY25

    Consolidated revenue grew 5.6% in constant currency, adding approximately $36 billion versus last year.

    Adjusted operating income growth
    nearly 10%
    FY25

    Adjusted operating income increased nearly 10% in constant currency, and adjusted EPS was up 13%.

    Adjusted EPS growth
    13%
    FY25

    Adjusted operating income increased nearly 10% in constant currency, and adjusted EPS was up 13%.

    Currency headwind to reported sales
    $3.2 billion
    FY25

    Currency was a headwind to reported sales of approximately $3.2 billion or 50 basis points to growth and pressured EPS by about $0.02.

    Currency headwind to EPS
    $0.02
    FY25

    Currency was a headwind to reported sales of approximately $3.2 billion or 50 basis points to growth and pressured EPS by about $0.02.

    Global e-commerce penetration
    18%1,100 basis points higher than FY20
    Q4 FY25

    Global e-commerce penetration is now 18% of sales, about 1,100 basis points higher than it was in FY '20.

    E-commerce orders fulfilled from stores growth
    over 500 million orders
    past 5 years

    In the U.S. specifically, we've built marketplace capabilities to broaden our assortment while also growing the average number of e-commerce orders fulfilled from stores by over 500 million orders without new store growth during that time period.

    Currency headwind to reported sales
    $2 billion
    Q4 FY25

    Currency headwinds reduced reported sales by over $2 billion or 120 basis points of growth.

    Same-day delivery catchment
    93%
    Q4 FY25

    During the quarter, we expanded our store fulfilled delivery catchment areas to now reach 93% of U.S. households with same-day delivery.

    Expedited delivery orders
    more than 30%
    Q4 FY25

    The popularity of expedited delivery has resulted in more than 30% of orders coming from customers and members that elected to pay a convenience fee to receive their scheduled delivery in less than 1 hour or less than 3 hours.

    Number of rollbacks
    over 22,000
    last year

    In Walmart U.S. last year, we had over 22,000 rollbacks.

    Same-day/next-day items delivered
    over 2.3 billionincrease of over 30%
    past 12 months

    In the past 12 months, International delivered over 2.3 billion items same day or next day, which is an increase of over 30% with about 45% of those items delivered in under 3 hours.

    Sam's Club China membership income growth
    more than 35%
    FY25

    Within International, membership income from Sam's Club China grew more than 35% as member counts continue to increase, helped by the opening of 4 new clubs in Q4.

    Walmart Connect U.S. growth
    24%
    Q4 FY25

    Our global advertising business increased 29%, led by 24% growth from Walmart Connect in the U.S.

    Marketplace sellers utilizing Walmart Connect growth
    about 50%
    Q4 FY25 vs last year

    We're making good progress on expanding the number of U.S. marketplace sellers that also utilize Walmart Connect advertising with seller advertising counts up about 50% versus last year.

    WFS penetration
    nearly 50%up nearly 600 basis points vs last year
    Q4 FY25

    And with our low-cost fulfillment offering for sellers, WFS penetration reached record highs of nearly 50%, which is up nearly 600 basis points versus last year.

    WFS sellers growth
    over 20%
    Q4 FY25

    Outside the U.S., we're seeing similar encouraging trends in both Mexico and Canada, the number of WFS sellers increased over 20% and sales of items delivered through WFS grew over 85%.

    Sales of items delivered through WFS growth
    over 85%
    Q4 FY25

    Outside the U.S., we're seeing similar encouraging trends in both Mexico and Canada, the number of WFS sellers increased over 20% and sales of items delivered through WFS grew over 85%.

    Walmart Data Ventures net sales growth
    double digits
    Q4 FY25

    Within data analytics and insights, Walmart Data Ventures continues to grow rapidly with net sales up double digits.

    Walmart Data Ventures client base growth
    nearly doubled
    past year

    Our client base nearly doubled over the past year, and we're excited about continuing to broaden our reach to new markets with the launch of the platform in Canada.

    SG&A expenses deleveraging
    46 basis points
    Q4 FY25

    SG&A expenses deleveraged 46 basis points in the quarter.

    E-commerce incremental margins
    11%over twice the rate of overall margin
    Q4 FY25

    As we grow these digital businesses like e-commerce, the incremental margins in our e-commerce business globally for us in the quarter were 11% twice the rate -- over twice the rate of what our overall margin is.

    E-commerce losses improvement
    80%
    last year

    Just in the U.S. alone, we saw an 80% improvement in the level of e-commerce losses in the last year.

    Developer hours saved by AI tools
    about 4 million
    last year

    Last year, these tools helped us save about 4 million developer hours.

    Dividend increase
    13%largest increase in over a decade
    this year

    And as we announced this morning, we're pleased to raise the dividend by 13% this year, the largest increase in over a decade, reinforcing our commitment to strong cash returns to shareholders.

    Inventory level growth
    2.8%
    Q4 FY25

    As a company, we drove a lot of volume during the holidays and ended with our inventory level in good shape, up 2.8%.

    Current rollbacks
    over 5,800over 1,000 new in last few weeks
    current

    I just -- I would just say, again, thanks to the team we have over 5,800 rollbacks in stores today. Over 1,000 of those are new in just the last couple of weeks.

    E-commerce growth
    30%
    Q4 FY25

    But one of the real highlights for me has been the e-com performance, which has been up 30%.

    Same-day delivery growth (under 3 hours)
    180%
    Q4 FY25

    with the last question with fast delivery and then our same-day -- our deliveries under 3 hours and under 1 hour, we grew 180% year-on-year, which is really exciting.

    Same-day delivery units
    over 5 billionover 100% growth for the year
    last year

    Our same-day delivery of over 5 billion units last year, over 100% growth for the year.

    Beneficios program sign-ups
    over 45 million
    last year

    And over the last year, we launched a program called Beneficios in Mexico, and we have had over 45 million customers sign up for that

    PhonePe Total Payment Volume (TPV)
    1.7 trillion
    by Jan 31

    I mean the PhonePe business to by the end of 31st of January hit 1.7 trillion TPV

    PhonePe daily transactions
    310 million
    daily

    and they have something like 310 million transactions daily.

    Return on Investment (ROI)
    15.5%improved approximately 50 basis points
    Q4 FY25

    Return on investment improved approximately 50 basis points to 15.5%, a level last achieved in 2016.

    Industry KPIs

    9
    MetricValueDetails
    Sg a rate46bps
    Marketplace 3p GMV37%%
    Gross margin drivers53bps
    Warehouse store club count4clubs
    Comparable same store sales4.6%%
    E commerce digital sales growth16%%
    Advertising retail media revenue29%%
    Private label own brand penetration—
    Category level comps and inflation deflationmid-single-digit%

    Product announcements

    3
    ProductTypeDetails
    Same-day pharmacy deliverylaunch
    Wally (AI agent for merchants)launch
    Coding assistance and completion tools (AI)expansion

    Deals & partnerships

    2
    PhonePeFintech business making preparations for an IPO in India.

    PhonePe team has long aspired to be a public company.

    VIZIOAcquisition of VIZIO and its SmartCast operating system.

    VIZIO will be added to Walmart's portfolio of advertising capabilities. Transaction costs impacted Q4 SG&A and Q1 FY26 OI.

    Capital programs

    1
    Supply chain automationunderway

    Benefit: lower our cost to serve, which supports our EDLP commitment

    Investments in supply chain automation and productivity are expected to lower our cost to serve, which supports our EDLP commitment.

    Risks & headwinds

    5
    Currency headwindsFY25, Q4 FY25

    $3.2 billion (50 bps) to reported sales for FY25; $2 billion (120 bps) to reported sales for Q4 FY25; $0.02 to EPS for FY25; $0.01 to EPS for Q4 FY25

    SG&A deleverageQ4 FY25

    46 basis points

    Mitigation: continuing to optimize our business to deliver greater efficiency

    Merchandise category mix shiftover the past couple of years

    margin pressure

    Mitigation: diversified and durable sources of profit like advertising and membership

    Uncertain macroeconomic environmentFY26

    still uncertainties related to consumer behavior and global economic and geopolitical conditions

    Mitigation: Walmart is well positioned to navigate as it has over the last several years, while continuing to deliver value for customers and shareholders alike.

    Tariffsfuture

    can't predict what will happen in the future

    Mitigation: managed for many years; great team; wired to try and save people money

    What to watch in Q1 FY26

    5

    FY26 Operating Income Growth (Normalized)

    FY26
    Current5% to 7% (normalized guidance)
    TargetOutperformance vs. guidance

    Why it matters

    Management's normalized guidance suggests accelerated profit growth, and outperformance would signal strong execution and macro resilience.

    This year, if you normalize for the effect of leap day in the VIZIO transaction, our guidance suggests an outlook of 5% to 7%, that reflects how we all feel about this business.

    Q&A highlights

    6

    Is Walmart becoming more sensitive to macro conditions, and how does this factor into FY26 guidance? What if sales shortfall?

    Management believes the model is resilient due to value and convenience, gaining share. January was the strongest comp month. Guidance is measured but reflects confidence, with normalized OI growth of 5-7% for FY26.

    “Our business outperformed on virtually every operational and financial metric in the quarter. We feel like we're performing exceptionally well. The guidance that we provided, we feel is very consistent with what we've done in prior years.”

    asked by Michael Lasser · answered by John Rainey

    2 min read6 chapters

    Detailed Narrative

    01

    Omni-Channel Strength and Market Share Gains

    Walmart concluded FY25 with strong Q4 results, achieving 5.2% sales growth and 9.4% adjusted operating income growth in constant currency. The company continued to gain market share across various income levels and geographies, driven by increased transaction counts and unit volumes. This performance reflects a successful strategy of offering low prices and enhanced convenience, with customers shopping more frequently and purchasing more items across categories.

    02

    Profitability Expansion through Diversification

    The company is successfully growing profit faster than sales, leveraging higher-margin businesses such as membership, marketplace, and advertising. For FY25, global advertising grew 27% to $4.4 billion, Walmart U.S. Marketplace revenue increased 37%, and global membership income rose 21% to $3.8 billion. These new profit streams enable investments in core business areas, including lower prices and associate wages, while expanding operating margins.

    03

    E-commerce Evolution and Improved Economics

    Global e-commerce penetration reached 18% of sales, an 1,100 basis point increase over five years, with Q4 e-commerce growth at 16%. The company has significantly improved e-commerce profitability, particularly in Walmart U.S., where net delivery cost per order reduced by approximately 20% in Q4. This improvement is attributed to densifying delivery routes, increased customer adoption of expedited delivery options, and the growing contribution from higher-margin digital businesses.

    04

    Strategic Investments and Returns

    Walmart continues to invest heavily in its physical and digital infrastructure, with CapEx totaling $23.8 billion in FY25. These investments focus on store remodels, new construction, and supply chain automation, aiming to improve customer experience, broaden last-mile delivery capabilities, and lower costs. Return on Investment (ROI) improved by approximately 50 basis points to 15.5%, reaching a level last seen in 2016, demonstrating effective capital deployment.

    05

    Associate and Customer Focus

    The company remains committed to its "Everyday Low Price" philosophy, implementing over 22,000 rollbacks in Walmart U.S. last year. Investments in associate wages and benefits are yielding positive results, such as improved associate turnover at Sam's Club. New services like same-day pharmacy delivery and enhanced shipping offers at Sam's Club underscore a focus on convenience and customer satisfaction, contributing to strong customer engagement across income cohorts.

    06

    Technology and AI Adoption

    Walmart is increasingly leveraging AI and technology to enhance operations. A new AI agent, "Wally," is being used by merchants to identify root causes of stock issues, while new coding assistance tools saved approximately 4 million developer hours last year. These technological advancements are driving productivity, streamlining deployments, and accelerating business growth, reflecting a culture of rapid adaptation and innovation.

    AI-generated summary of the company’s earnings call. Not investment advice.