Press Release

DBRS Morningstar Confirms Walmart Inc. at AA, Stable Trends

April 21, 2021

DBRS Limited (DBRS Morningstar) confirmed Walmart Inc.'s (Walmart or the Company) Issuer Rating and Senior Unsecured Debt rating at AA. All trends remain Stable. While DBRS Morningstar acknowledges Walmart's stronger-than-expected operating results for the fiscal year ended January 31, 2021 (F2021), because of unprecedented demand surge stemming from the Coronavirus Disease (COVID-19) pandemic, the rating confirmations and Stable trends reflect DBRS Morningstar's view that the Company's operating results should moderate as the global rollout of coronavirus vaccines gains traction and the economy reopens. Walmart's ratings continue to be supported by its size, dominant market position, and relative resilience to economic cycles. The ratings also continue to consider the increasingly competitive landscape and mature nature of some of the Company's core markets.

During F2021, revenues increased 6.7% to $560 billion, primarily driven by strong comparable sales in Walmart U.S., Sam's Club, and across the majority of the Company's international markets because of increased demand stemming from the coronavirus pandemic. EBITDA margins remained flat at 6.0%, as growth in comparable sales was largely offset by coronavirus pandemic–related incremental expenses and temporary closures of some of the Company's auxiliary services in response to the pandemic. As such, EBITDA increased 6.8% to $33.7 billion in F2021 from $31.6 billion in F2020.

DBRS Morningstar expects that Walmart's operating performance will moderate throughout F2022 as the economy reopens and that its earnings profile will remain relatively stable over the medium term based on modest sales growth and relatively stable EBITDA margins, after taking into account Walmart's divestiture of its UK, Japan, and Argentina operations during F2021. Excluding divestitures, DBRS Morningstar forecasts the Company's revenue to grow in the low single-digits in F2022, primarily driven by low-single-digit comparable sales growth from its brick-and-mortar stores and double-digit growth from its e-commerce channels. DBRS Morningstar expects EBITDA margins to decrease marginally in F2022 as a result of additional wage investments and continued investments in the Company's e-commerce and fulfillment initiatives. With that said, DBRS Morningstar expects EBITDA margins to improve to more than 6.0% over the medium term because Walmart should benefit from these expenses and investments over time, as they should strengthen the Company's competitiveness and support future growth. As such, DBRS Morningstar expects Walmart's EBITDA to decrease to slightly less than $33.0 billion in F2022 from $33.7 billion in F2021.

DBRS Morningstar expects Walmart's financial profile to remain relatively stable over the medium term based on the strength of its free cash flow generating capacity and the expectation that the Company's capital allocation will remain balanced such that financial leverage will remain supportive of the current ratings. DBRS Morningstar expects Walmart's cash flow from operations to continue to track operating income to approximately $27 billion in F2022. Capital spending is expected to increase meaningfully to approximately $14 billion in F2022, primarily focusing on e-commerce, supply chain, automation, and store remodelling. DBRS Morningstar expects annual dividend outlay to be relatively stable at approximately $6 billion, as dividend-per-share increases are likely to be offset by share repurchases. As such, DBRS Morningstar expects the Company to generate free cash flow after dividends and before changes in working capital of approximately $8 billion in F2022. DBRS Morningstar expects that Walmart will use the bulk of its free cash flow for share repurchases but notes that the Company may also maintain higher cash balance in the near term for financial flexibility because of uncertainties related to the coronavirus pandemic and its macroeconomic aftereffects. Over the medium term, DBRS Morningstar expects an improvement in leverage to be primarily driven by EBITDA growth and expects lease-adjusted debt-to-EBITDA to remain appropriate for the current rating (i.e., lease-adjusted debt-to-EBITDA below 2.0 times on a sustained basis). However, should lease-adjusted debt-to-EBITDA increase for a sustained period of time as a result of either weaker-than-expected operating income and/or more aggressive financial management, the ratings could be pressured.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating Companies in the Merchandising Industry (July 30, 2020;, which can be found on under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021;

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release:

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

This rating was not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar did not have access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is an unsolicited credit rating.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit or contact us at [email protected].

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