Analyzing Walmarts Financial Performance- Net Sales Growth and Operating Income Trends (2018-2020)

Analyzing Walmarts Financial Performance- Net Sales Growth and Operating Income Trends (2018-2020)

Calculate the percentage increase in Net Sales from 2018 to 2020. What environmental factors (internal and/or external) may have contributed to the increase?

2018- $495,761,000

2020-$519,926,000

$24,165,000/$495,761,000*100

=4.87%

Internally, Walmart’s membership increased significantly, especially in 2020 and 2019, 4.7 percent and 2.7 percent respectively. More individuals renewed their membership leading to high rates while new ones joined. The increased sales on the property also contributed to higher net sales. The reduced operating expenses due to lower costs of labor and lease exit influenced the sales. Club closures and suspended real estate projects contributed significantly to a reduction in operating expenses. Increased sales by stores led to the increment due to transaction and ticket growth.

Moreover, the improved mix of merchandise and reduced pressure from transportation costs also had a positive impact. The decision to shift focus from multiple fashion platforms to a single one may have improved the sales significantly as the clients get better offerings. Walmart dropped Flipkart’s two fashion trade names to place more emphasis on a simple business model for better service and product delivery.

Although Total Revenues for 2020 were higher than in the two previous years, Operating income was lower than in 2019. What elements in the Income Statement caused the 2020 Operating Income to be lower? What environmental factors (internal or external) may have influenced these elements?

The high productivity impacted the sales positively. The operating income was reduced due to paused real estate projects that were valued at $0.2 billion. The company also wrote off Flipkart’s two trading names to focus on one fashion platform. Walmart also exited various properties, which brought the costs down significantly. The reduced cost of labor influenced the costs of operation, while the closure of some clubs also affected the costs required for running the business. The closure of clubs reduced the number of employees that Walmart needed to remunerate every month. The need to focus on single businesses, such as fashion offerings, for increased competitiveness and better offerings for clients motivated this move.

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The information in the Walmart Consolidated Statements of Income can be accessed and reviewed. This and other Walmart financial information are on the Walmart.com website> Our Company > Investors section.
Walmart 2020 Consolidated Statements of Income.pdf

Use the content of this week’s readings and videos, the 2020 Walmart Inc. Consolidated Statements of Income, and additional research to complete the following steps:

Analyzing Walmarts Financial Performance- Net Sales Growth and Operating Income Trends (2018-2020)

Calculate the percentage increase in Net Sales from 2018 to 2020. What environmental factors (internal and/or external) may have contributed to the increase?

Although Total Revenues for 2020 were higher than in the two previous years, Operating Income was lower than in 2019. What elements in the Income Statement caused the 2020 Operating Income to be lower? What environmental factors (internal or external) may have influenced these elements?