Walmart Inc.

Overview Key strengths Key risks Dominant market position in the global retail industry with massive scale, strong customer value proposition, wide selection of products and services, and good geographic diversity. Prevailing fierce competition from brick-and-mortar and online retailers requires balancing everyday low prices and inventory levels appropriately. Focused on improving customer experience through e-commerce channel and optimizing in-store capabilities. Growing capital expenditure as the company spends on its omnichannel business model, with higher fuel costs also weighing on profits. Hefty operating cash flow generation that supports business investments and shareholder returns. Unfavorable sales mix driven by changing consumer preferences to various categories impacts margins. Exceptional liquidity. Walmart's S&P Global Ratings-lease-adjusted leverage for the latest 12-month (LTM) period ended April 30,

...We anticipate Walmart Inc.'s S&P Global Ratings-lease-adjusted leverage will remain stable in the mid-1.0x over the coming year, in line with the company's conservative financial policy. Walmart's S&P Global Ratings-lease-adjusted leverage for the latest 12-month (LTM) period ended April 30, 2023 (first quarter 2024) was 1.6x, against a downside trigger of 2.0x. This was similar to fiscal 2023 levels, after de-leveraging to the low 1x area in fiscal 2022 amid strong pandemic performance. We note that third-quarter fiscal 2023 and fourth-quarter 2023 included charges of $3.3 billion and $800 million, respectively, associated with the opioid legal settlement frameworks and business reorganization and restructurings. Nearly 60% of annual U.S. sales are grocery, helping the company attract traffic in a persistently inflationary environment. During the first quarter of 2024, the company performed better than our expectations. Walmart recorded revenue growth of 7.6% to $152.3 billion compared...

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