Walmart Inc.

The stable rating outlook on Walmart reflects S&P Global Ratings' expectation that the company will generate good top-line gains after the pandemic via both in-store and online sales growth. We expect the company to continue to prudently managing its financial policy plans given cash balances the company amassed during the pandemic and our cash flow expectations and believe upcoming debt maturities will be refinanced. We could lower the ratings if we expected S&P Global Ratings' lease-adjusted leverage would remain above 2x on a sustained basis. This could occur as a result of weaker-than-expected EBITDA performance or debt-financed acquisitions. We could also lower the rating if execution missteps or an increasingly competitive e-commerce landscape led us to view Walmart's stellar competitive

...Walmart is accelerating investment in its "emerging business model," which we believe will drive growth in coming years, albeit sacrificing some margins in the near term. Capitalizing on strong top-line growth during the pandemic and evolving consumer shopping habits, Walmart plans to boost capital spending to about $14 billion, focusing on initiatives to improve customer experience, support future growth, and drive operational efficiencies. Walmart expects the initiatives will evolve its business into a next-generation, agile retailer, using its real estate assets and technological capabilities to serve customers at their convenience, or what it calls an emerging business model. We believe these initiatives would keep EBITDA margins almost flat in the next one to two years, with potential margin accretive opportunities thereafter....

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