How Much Does Walmart Spend On Selling, General And Administrative Expenses?

December 13th, 2019 by Trefis Team
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WMT
Walmart

Walmart (NYSE: WMT) spent $107.1 billion on Selling, General and Administrative expenses in FY 2019 (ended January 2019) which was 20.8% of Total Revenues.  Trefis estimates the expense to be around 20.5% of Total Revenue in 2020 (ended January 2020). The Company’s total expenses have trended steadily higher from around $471.6 billion in 2017 to about $507.2 billion in 2019 (ended January 2019). As a percentage of revenues, expenses have remained roughly flat at about 97-98%. Below, we discuss Walmart’s net margins and Total expenses along with its components.

View our interactive dashboard analysis on Walmart Expenses: How Does Walmart Spend Its Money?

 

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Walmart’s Net Income Margins fell between 2017 and 2019

  • Walmart’s Net Income margin fell from 2.9% in 2017 to 1.4% in 2019, primarily due to higher Non-Operating expenses.

Walmart’s Total Expenses Have Increased by 7.5% between 2017 and 2019

  • Walmart’s total expenses have grown from $471.6 billion in 2017 to about $507.2 billion in 2019 which comes to 8.5% over the 2 years.
  • For 2020, we expect total expenses to stand at $513.9 billion, which is comprised of:
    • Operating Expenses = $503.7 Bil
    • Income tax expense = $7.9 Bil
    • Non-operating (income)/expense = $2.3 Bil

Below, we take a look at how the company’s key expense components have trended and the key reasons for the change.

  1. Operating Expenses: Operating Expenses Have Increased From $463.1 billion in 2017 to $492.4 billion in 2019, driven primarily by a $24 Billion Increase In Cost Of Sales.

  • Cost of Sales have increased from $361.3 billion in 2017 to $385.3 billion in 2019 and is expected to be around $395.5 billion in 2020. As % of Revenues, Cost of Sales has increased  gradually from 74.4% to 74.9% over the same period.
  • Operating, Selling, General and administrative Expenses increased from $101.9 billion in 2017 to about $107.1 billion in 2019 and is expected to be around $108.2 billion in 2020. As % of Revenue, Selling, General and administrative Expenses have declined from 21% in 2017 to 20.8% in 2019.
  1. Non-Operating Expenses: Walmart’s Non-Operating Expenses have increased from $2.3 billion in 2017 to $10.5 billion in 2019. The sudden increase in 2019 was due to $4.8 billion pre-tax loss on the sale of a majority stake in Walmart Brazil and a $3.5 billion pre-tax decrease in the market value of the company’s investment in JD.com. Trefis estimates the expenses to be back to its old level in 2020, i.e. around $2.3 billion.
  2. Tax Expense: Walmart’s Income Tax Expense has declined in absolute terms from $6.2 billion in 2017 to about $4.3 billion in 2019, The effective tax rate went up in 2019 due to Transnational Tax liability where the company recorded $413 million of provision.

 

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