WMT - Earnings call transcript Q2 2021

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Operator

Welcome to Walmart’s Fiscal Year 2021 Second Quarter Earnings Call. At this time, all participants will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, that today's conference is being recorded. At this time, I'll turn the conference over to Dan Binder. Dan. ahead, go Please

Dan Binder

President followed Good U.S. earnings welcome and a call. executive McMillon, of Rob. Vice Biggs, That will quarter and and President few an provide John Walmart's fiscal Walmart our Chief Walmart's Doug including XXXX I'm team, CEO; update and our discuss moments, morning, results. few you, Brett to Executive and by on second members and CEO Thank joined President Officer; a be Doug business second session. you will quarter Financial of the Furner, In question-and-answer and Brett by

as Web a Please It for review entire statement reconciliations SEC, to I that as and release cause could results over as pandemic. ongoing forward-looking Doug today's as not presentation press now slide Before may to our stock.walmart.com. well uncertainties and uncertainties McMillon. risk the the to to you being actual from from the these are well pleasure filings but differ is and me limited call subject with Harbor statements, recorded accompanying identified on turn our and risks and statement remind our site COVID-XX regarding cautionary at to, Safe These call resulting statements. factors uncertainties risks the the is call our include, non-GAAP statements. These include that Doug, turn forward-looking and materially let are in statements my over to

Doug McMillon

and the we challenges positioning [Technical grateful. rising customer are associates to to new for difficulty] the while thank needs They I for adapting are future, our business and occasion. changing our and to want tackling

supply associates guide possible we this operating customers quarter, priorities on as as last and the clear and terms discussion-making safely their our being; which accelerating and three, in our efforts are, operating; physical we suppliers serving financial business the crisis. the through a justice; increase, shared supporting chain our operationally in marketplace our to a others, long-term. operate, managing of two, one, strengthen financially and of with including hiring includes [indiscernible] and our keeping and supporting our and to well our driving priorities where strategy I frontline our for five, four, equity, As are well set business sellers Those to helping communities the serving short-term; racial

associates; and way made many be our so I inspiring, been it pleasure as of country to they continue distribution and around centers. has my a visit to them clubs, stores, the First, visiting with

quarter, in year. the new of outlined last this XXX,XXX them, have we hired we than associates number call, a measures support more have beginning of and since we continue. During place those to Globally, the

emergency supporting our our bonus COVID-XX tenant's paid the to Myshare purpose, After with called people a diagnosed removal and That cash working, or virus, with or leave uncomfortable enables stay to which of Myshare. policy, related quarterly our sick, continued our includes care for We to feeling need if to requirements others, the priority home program are feeling our basket customers. prices Consistent our committed our $X.X associates, goods. special and globally, lowest in or of on cash this ensuring associates EDLP, our bonuses we year remain next support serving to announced is financially. we billion our they

and took also strong more TVs, that the for sports, restaurants With sales significant computing, led continue has at across operating in connected more to home, at those our restrictions trend. quarter, Customers time entertainment home. advantage During and strengthen business meals to of from for time families country, categories were like home we prepare categories. so and which our benefited the that much second spending outdoor customers experienced

a and behaviors where return paper to expect, food supplies, and we saw occurred. for disinfectants, continues hotspots would At cleaning stock be high specific in consumable in there categories up geographies, demand you extremely certain times, As goods.

starting back-to-school categories demand. in we of volatility by supply levels, chain negatively see to health a While some standpoint, was seasonal and the recover terms there impacted in timing in in crisis is are stock. terms From of

have been in whether believe in online, We both homes. or well-positioned thoughtful work stores our classrooms students and are or their we approach we and teachers from

The our we ways many communities third the am support priority help others communities for supporting I of for us food has are including the in been to we banks. serve. proud

program, Change million Spot campaign XXX helped an quarter our in access need. through for This donation provide to we and Fight estimated Hunger food meals to people

sites become COVID-XX rightly-focused so across than our across continuing racial on states. testing We support communities also XXX equity Communities for are we. XX more are and and with have through America justice,

the inside our starts efforts. inclusion with company work Our diversity

also we core put and have business nation’s to addition, where a to can team justice In influence places we good. business, look education, systems and established of for for criminal healthcare, work our size to the our financial, our

racial Club, is the Flipkart launched for well to have systems same-day to Walmart. business business committing capabilities carry that now Even omnichannel to globally. with Mexico, as U.S., we of recently the solutions just and membership $XXX to and cash has from under kiranas pickup solution India, customers our lot the a in including our delivery orders serve and our In have Wholesale, two that been efforts four other and Sam’s better buzz Flipkart. launched small services in There XX% to Foundation and continue a team well hours. initiatives delivery mentioned. company’s of equity, omnichannel joins during managing business-to-business business at leverage will we philanthropic build this crisis, express expand the about we and receiving a strategy executing their delivery In Walmart our addition, launched the complement In Walmart center I fund shape million

across launch, that and deliver pick to delivery limited of food deliver just have other service That on super that will year. can and was a a we with broad Since that a to for combined merchandize. subscription limited speed to compelling but and offer in We the nationally assortment reason ability sign up. have few categories wide general ourselves not been as grocery proposition. late of consumables our membership and benefits since center testing customer with to proven last delivery the assort with customers result set a We think consumables, a breath we

So, when we more membership membership have timing share been appropriate. towards a launch. new and We’ll moving about that it’s

again entertaining customers I’ll at themselves affecting people excluding a home, stimulus, As the eating their it investing several in at our Comp our more performance, U.S. including Walmart X.X% with and to QX and strong fuel. yards. quarter government were There sales at home, tailwinds relates were performance segment. QX this homes on focus by begin

reduced also hours of We had stocks. out some store headwinds and including

our we quarter, range. As the waned benefits towards a the normal comp end of into settle sales from stimulus the saw

time improve more believe made reduced the cost operating see. from Walmart now during ecommerce and we The within are We losses. are and online we fixed going stores quarter We progress and The several U.S. as The profit speed, organization. changes losses productivity. will are growth integrated, and to and structural experience contribution product these difficult this. tailwinds omnichannel achieve like an forward. sales change good the were really into our build continue innovation, significantly are mix, growth are add business transform the we leverage. progress pleased making with to walmart.com. obviously changes as in benefit increase we to reduced brands, merchant that we These a to strong accelerating and improvements really made marketplace, on new on had experiencing We to a This is we associates for changes teams path healthier our are

providing it to another are would of otherwise that be. financial look we So, with and than support forms additional time other role easier make to support for along

again rates, Club The executing team sales. and delivered Walmart delivered closure Scan of Go line The and constant of had the Canada, for and China, and We GMV we increased see. quarter. quarter, International given value in the of as Mexico and well grew including and XX.X% COVID-XX about omnichannel as Flipkart parts pre currency member accelerating, and top strong, fuel from exceeding portions where team with seven The markets half of to of government improvements we Flipkart Africa X.X% as is membership demonstrated good Sam’s their the saw well. count, significant the and America to we this customers income is expected the for a resilience solutions. positive tax the plus better incredible the as India, is headwinds ten effects Turning penetration. Central after comp levels, currency, member faced of close in proposition reopened today in which way and stop team I'll which & results by was once great lead of of saw for thanking shopping membership sales you in remove comps mid-May, excluding popularity In one and is choose when X.X%. tobacco challenging growth associates the fuel item. the FX renewal mandated work. than also Profit our performance business international discrete for period. a

Our wish incredible to team resonate be to and better releasing convinced I in is to during over it positioned this to I'd ESG that our with of space. also the Brett. remain all be well report customers our family's turn we I report doing to integrated next crisis, company the with and omnichannel health, and you the like good I'll strategy it'll your you week. this encourage time offering winning continues mention the around forward. going spend It's we'll understand work globe. now

Brett Biggs

Doug. Good everybody. Thanks, morning,

affect their a larger in new thanking second trip of with to win. proud while the ways working company we has stores, for in sizes the by behavior quickly channel start set changing fantastic time. how positioning as of eCommerce. challenges toward of are me The as during quarter to our needs Let Every through navigating work respond to customers basket consolidation continued so unusual I'm associates of and our day to shopping health serving well shifts and team adapted broad crisis customers. the this the

us, reminder multiple our a shop that are and assets unique want to with provide for results innovating Our to them. we're leveraging customers and solutions ways

the is costs organization customers. we position to support have U.S. our further We've recent and remain and incremental steps to associates strong, even operating streamline our very as support maintained cost financial omnichannel strong strategy. better COVID-related to took on and Our laser-focused we culture efficiency

X.X% the X% more Total basis QX more by by in margins. segment each the benefited affected operating QX billion billion So including in benefits, related XX quarter. limitations is was negatively higher flow Walmart last by year's than fluctuations than than categories, recently $XXX was versus also which sales basis constant costs $X and restructuring with despite result a tobacco. growth basis to total, net government nearly and billion points. costs, some discrete negatively price discipline more XX% general negatively sales was lower as stimulus, sales margin Currency offset for and year. is into & business in versus continued affected Go about about EPS last Free approximately constant Gross the early and This down leverage year. markets points strong SG&A total the $XXX expenses fuel of was operating grew sales Operating revenue CapEx increased more some more increased currency up increased deleverage related cash and let's and EPS. was U.S. points, $X.XX excluding better basis Adjusted to was quarter than adjusted XX merchandise comp by XX% affected operating get expense constant higher results. of associate due company $X sales, grew than demand. of $X.X up $X.XX. currency, a investments to by of X%. incremental strong in markdowns comp from and year. and in bonus cost XX% nearly currency heightened the adjusted In which to last special cash EPS was margin year-to-date by bonuses International about these lower U.S. income strong timing. lower fuel aided announced inventory Scan COVID The carryover profit to year-on-year item. about Inventory increased billion third mainly flow expanded about XXX partially was X% about of which on in XX% tax million the impacted levels, by U.S. and by

While very the the capital shares continue we strategy the unchanged, and we in allocation any didn't is good to company. repurchase our quarter, position about feel of

excluding fuel U.S. eCommerce approximately Walmart digital We quarter and sales throughout the the growth. with we strong comp seller quarter. Comp weekly Now growth segment. X.X% with of segment increases operating make quarterly rates XX%. are continue eCommerce for assortment sales increased contributing in each let's of had discuss results progress sales a repeat strong tools and sales triple-digits. the active to expansion saw significant on of two-thirds marketplace growing eCommerce customers,

fulfillment in but permanently store omni capabilities of same day from delivery more slots, accelerating levels. and increasing investments stores, shift nearly including solutions, services continued For February, since store the pickup to delivery pickup and XX% expanding from pre-filming and rollout

The second and merchandise as were general started dispersed. funds categories online growth stimulus both quarter store as accelerating strong government had in

electronics. including more As increases strong home, robust landscaping, at spent time another in home, goods, sales in strong saw growth fresh. families sporting like quarter and we categories Grocery had

throughout grew quarter transaction an X%. continued XX% to sales still more about sales stimulus merchandise XX%. due quarter, pure higher toward resulting points ticket profit but was a As markdowns. comps decrease tapered funds than of general the end at of consolidation July Gross strong started margin the of Trip in average XX and about to and normalize, increase categories basis off rate increased the and

product eCommerce improvements the Care the about points. incremental Auto price margin progress approximate restructuring temporary COVID-related closures the billion expense of by and The affected well XXX Centers continued the sales. The leverage negatively marketplace of faster affected saw and costs a rate. Centers margin costs Vision in negatively growth our basis as as of $X.X also and carryover reflecting year's the mix We last rates and investment on

the segment deleveraged result, points. basis a As U.S. XX

operations. about in strong for sales productivity underlying declined almost normal stock is stores operating XX% both categories. higher income by Adjusted out was X.X%, some strong aided and in eCommerce However, significantly lower and quarter up of losses. physical than the reflecting Inventory eCommerce

to areas we're there continue good our Overall, make are some still in specific that we position, a in-stock position. in While progress challenging. are

the noted, timing As start slower than the market, the given throughout to to a season returning physically usual students, of back-to-school the is school. off around uncertainty

closure back-to-school, later backpacks, As to are Canada to the like operational Seven currency International Despite including the anticipated several coming constant while markets fairly results. increased comp come the in than range XX% comps home normal. we limitations to are season Flipkart, others positive X.X% sales. school China into Despite sales net like the soft. were sort exceptionally than of start a expect basic better and including showed result, solid and are nearly understandably in furniture in crisis, strong, choppy U.S. apparel of posted performing quarter. and normal results Items growth tablets Sales due the and and government well, be mandated in a office eCommerce. slow to XX overall laptops, markets quarter. Mexico supplies,

driving favorably in closed these grocery comps closures GMV were market. America the omnichannel solid growing and around with and the basis, about the but income in during sales basis, quarter. fuel, Central eCommerce In since sales. adjusted levels. but for pre-COVID in the discrete were billion significant were one-fourth faster Africa, $X.X year-over-year. online and the quarter. is declined approximately of a were previously-announced particularly most fuel early offerings currency sales are portion closed Currency the sales stores Excluding travel Customers responding about like also Flipkart on on excluding X% in constant for were than decreases of of certain of item. pressured a triple-digit markets U.K., mandated reopening high-volume fluctuations in expanded of tax India, the at growth reported the headwind extensive restricted. government International quarter, exceeding XX.X% operating faced operations In quarter, increased markets mid-May, Africa, half We eCommerce South

businesses we During positioning for building additional the these on challenging of announced execute times, strong to China, investments strategy in by continue local powered the focused growth. and Walmart portfolio India

and For launch for directly wholesale, India a example, Flipkart the businesses help excited source of to we're in manufacturers small about marketplace creating BXB producers.

five will best categories for Club member positive transactions direct-to-home which in grew portfolio. with brand XX.X%, the tobacco terrific than opportunities our member Sam's business ECommerce and growth also reflected We more The and performed strong to increased QX, to smart had across benefits from food evaluate with demand well. contributions both strength quarter particularly strength including years. XX%, broad our pleased membership another strong growth continue average quarterly sales ticket. fuel The sales and with for showed income excluding Sam's. and were strong, We're stimulus. across strong consumables, strong the government sales X.X% comp strengthen the position trends also of of with grew performance Membership delivery.

were rates renewal Sam's COVID-related plus and historically also strong incurred a penetration expenses. member signups high-level. at very member New was and incremental

they costs the quarter our providing income increasing offset more $XXX in first-half billion business stimulus line spending various crisis more in where ensure be and In stock and our costs your would rates continued large strength FY continue. in the approximate happy and the with QX, for financial However, now on In aren't than remains and improved has the also greater saw their fuel. challenges, Walmart's was government and business If due the which crisis both turn, will dynamic strong uncertainty performance some key and remains The future are the Sam's questions. expected by leading. XXXX top $X.X today, the success release, headwinds channel remain and duration and allowing strategy the customer more extent stimulus million than operating in strong variables to financial of quite our Walmart profit. operational the to to health uncertain. tailwinds health our gross We've created also us XX% of stimulus external position of and omni reinforces margin year gross related buying quarter. business. impact spending, safety would we third around Currency global Thank excluding future. those the to incremental managed strong. be than impact due resulted you tailwind stay but operating and additional challenging headwinds QX, take sales part throughout in your stronger Despite associate of economy. the company the Consistent mix, and sales interest and position guidance incurred potential the we're complexities first to margin, we our for the than of this excellent, we to in

Operator

Thank this first you. with Our conducting coming from we’ll be time, question-and-answer [Operator question Instructions] line At Barclays. is the of Karen session. the Short

Karen Short

focus Hi, eCom bit. much. thanks very on growth want a to I little

app, first, you merchandize more quarter, mix gaining anything maybe any helpful. growth wanted if of give to I'm the given number marketplace, I think or where the was, on you could granularity update did interested give and demographics, attachment consolidation could customer you on part that last of but triple-digit a more in SKUs, more color granularity of out if then, you wondering, little you So, an that, then, general could share, and sellers, and this be the just get would the number rates any ask in obviously on of of on last terms terms called obviously very on and of the the provide you're

John Furner

Thanks John the Karen. for Furner. Good morning. Hi, question. It's

strategy are and online, had mix rates, strong the been both from up then and have XX% to which now home selling categories think quarter, are customers and which and the all new moved question. their by your in customers a I quarter. very online, to rates in a third have in that stronger bit strong retention marketplace, also see into homes excited we a been offices ties school We've have stores as the and has that in beginning home. we've pleased improvement second also apparel joined and growth which and Those eCommerce set in we said, performed the to of As part that well important also, point been and home of the you the made, is businesses,

seller we've our I is it a which tools In is prospect addition, business, now excited Fulfillment and the and say, by new been marketplace, business we're and should opening brings Service supplier running, as but including, well. that Walmart small up up

from quarter the retention new reacting More and we're are see team Walmart job the customer So, segments to and the the and trends. nice Online, to more did happy again, and rates. customer's a in changes customers buying

Operator

The Deutsche next line question is Bank. the of Paul Trussell from with

Paul Trussell

a Thank you range. strong shopping all you, and negatively a Brett, but comps that's spoke on, to second good morning, going in and being back-to-school but normal impacted, on quarter. congrats

we you can provide color any should additional we on in -- least seeing any that and maybe what or Just factoring as be takes puts to-date you're about other at think to has at price you in Doug, Walmart the third everyday had like model. form and each how model some shop most company this the year, quarter? always And know, low Americans

picture, you. help just the consumer Thank us for understand membership what as maybe So, for the well company? a as achieve big program can

Brett Biggs

Hey, thanks, Paul. Brett. This is start. I’ll

that the put going year, right the of that's year, out, challenging we there's As given we much talking back rest just understandable, we've they'll and so, and of past to various and longer for we're that that's guidance we're last guidance that. we didn't it QX why of on the not were and a really and so, months, going headwinds that given balance up just stimulus you We decision, what's continue and on classrooms, students back-to-school, that be, it's that can of into imagine for five just and of with back-half and the business, everything how and get and those do for talked certainly that timing quickly some time, but it'd than those with see in that the to slower the and some now. the led makes in those, period seen in things that's to the of takes about the normally as things to not the try certainly know, quarter to pointed the helped and things tailwinds puts going to giving is second business, one headwinds we're

Doug McMillon

and chime just it's is inventory don't will quarter, I and as have in but we'll shop The customers back-to-school, sort sales we and how we say we'll of there. our think out to we mixed and would as that the exposure want our go, through just to think on one we got parts of be react business. go the a just well-positioned, exposure location-by-location. lot I manage other of liability quarter, component

relates I question it As from a customer low think the everyday membership, of get about point Paul, price. to view, they'll to continue

So, sell that a continue kind add increased the want of thread to and get is assortment the out about a if for increasing want we the it an broad we'll with some the beyond it it and assortment form just but that Walmart of would it's in can delivery customer service from bulk, and and being more frequently, and of in delivery. starts then, of provide, things efficient you stores that we online, membership, to delivery, they the levels reason membership because that to pick buy annual takes up just and the

membership membership a the to grows. on. that as benefits an Building how also going the So data, more serve We’ll time and company aspect is really in of repeat that a relationship. to more of focus to it's important effectively for get customers be learn and

charge. strategy, winning in think customer ultimately the the we really So, in I how that, is Then it is relates I a by to and is mean about for we experience. what keep a think customer, omnichannel talking nutshell

we they to to decide to sure to that P&L the delivery, many from do, EDLP in and shelf store, will in sometimes and We in flexible. families do We're where with they to a multiple and prevents be and and that, the low way that. a they'll to and those sometimes price any membership, how that and able are keep them will them, and still manage way do benefits customers that going when serve manage buy prices want moment on value, we're ways need of of and focused in be points, get our sometimes we are really opening that pickup, we'll and they'll they'll have going will shop, make risk kind that offer they'll

Operator

next of from Your the question Gutman is Simeon Morgan Stanley. with line

Simeon Gutman

into to of and second less profitable can than the right, what have the morning. membership, any more of and it, in also if Good on the differentiate the what's you don't on indication to little the I latest plan of quarter, can market you're that talk take two proper was of you know about round done, so from that how expecting, first can I I financing? Flipkart. then maintained? you performance read be any offer, we relationship how the that should away is Doug, on And the mentioned that detail growth, some and from there was it fits you add going topic terms my and membership was it if features, topics, of Flipkart, then of second a valuation there interest On think a work on share terms there's you've the

Doug McMillon

Flipkart on take I’ll in chime can Simeon, first, Doug. more. John, is this you and membership Yes, then

think I investment pleased significant. lifted, really an the staying how to just wanted started much make this size make is the a once this that and sure made enough environment, As COVID-XX how We and the we're is was get on our the forward, being the thing room, of there's operate. making, Simeon, the strategy of they've that effective got really to has gone volume India sure we're back, opportunity the whole the enough we're to to aggressive. to front with cash going it so in government Flipkart, excited they're we the about since managed teams a environment restrictions that way, This to price see want decisions in investment, that to and foot nice close with the and relates it time when and came

or So, whether India think not Flipkart everybody business the we're the how PhonePe will Over valuation really getting portion valuable on just time, in the it's is, that understand in portion. short-term. hung-up I the

Brett Biggs

prices on with that multiple wide what good change, component, everyday Unlimited, thanks of first addition And for in customers make everyday called we're for price assortments morning, we're offering the come that last access entire acknowledge out else other offer when don't since channels, ready delivery the that, to said, It’s lives an to we'll at low from those multiple businesses important to which the much won't year we to Doug offer about in program membership, to to question offer, base and have and we channels, through the a a throughout low Simeon, we're now the so and strength our talk how than first we've of easier confident that as to and too it this say more thinking and great with across it. products Delivery morning, have membership. tested remove is that's friction assortment

Operator

Your next from line is question Michael of Lasser UBS. with the

Michael Lasser

a promotions competitors category promotional for you intense strategy low grocery strategy this have were that taking high thanks lower the some a morning, my of and quarter. less lot and Good them your price question. the Recognizing have within everyday for

better, or probably during period. sales a the high mid-teens Fresh lot competitors reported but your were was better grocery of Your up comps single-digits,

basis, So you important lost a market this share unit do category why was case? that on in you think the and

John Furner

it's John. Hey, Michael,

we're growth Now the billion billion for first, to high for around for digits grocery $X sales quarter, and that equates year. somewhere the $X sales in I'd up about single say growth year just we of over and the were

our for So, levels prices at year. throughout entire dollar pretty gains they quarter. the did were the big keep We the

in price retails first we gaps So, even quarter and the than that have have being second the gaps unit seen wide in saw wider retailer, everyday an low quarter. we price in resulted average price

like that X:XX an probably is and out, out, farther now share headwinds if a point early think did Then that bit entire deal first inventory quarter really gains general determining rent a X,XXX the then in we but we issues the at we've are was significant gain an XX in little really we to and in-stock Then Walmart and to but the very things change look now during of real but the second share, later, think there people how that make differences. to days that two QX job strong way the a and QX, did other up a in issues especially late such we in business, late that. level tell in have great able the focused total, to that's that positive turns that we that is factor had the goes a the So on, have lost big closing, we’re our done closing have and was to one factors has we're reacting that quarter summer early been normalizing, related that intense shopping are responded as but have the got we are a by sales have important this from last PM months, time team proud merchandise of the chain have of and have both and be through, still stores couple thing believe you reacting it’s the the shifted situation the the we'll been to to but pockets the of overall, work do data PM caused do ours been and could with, spikes in happened we'll the be supply do for the to had the as that just anything levels look food, lot in-stock doing, team way and pandemic.

Operator

next line from comes of Kate Goldman Your the Sachs. with question McShane

Kate McShane

I morning. more a continue driver second-half quarter, was the improvements of see were mix the that what within did year? could if of Hi, that during little eCommerce the behind Good your into losses you other losses bit this driven commentary expect get and thanks. biggest detail the around would to improving wondered you there we those

John Furner

you growth are Kate, leverage. have things Hi, few meaningful costs but anytime, helps really rates the effectively first, sales business it’s always that leverage any affected gain because There percentage you growth XX% to the business on John. doubling is the fixed helpful

what rate, has CP. contributed second call The helped thing that we is profit

of we're our the and working, for second the supply the a merchandise and the been Our responsible rest here of chain of in And we’re the people being accretive we thing, about stronger of teams one we’ve all then business. sales, to CP have relation supply way is than the in rest channels. now which in and two higher also CP the category benefits excited the third home businesses apparel together business chain the have merchants which has number of come the across have and an of in mix marketplace factors, categories, are been come factor business from strong

from leveraging Walmart but a continued CP improve CP be contributed and should the from lower leverage rates coming to and those rates all leverage in from to So, mix as able both fixed, losses a gain quarter. business

Operator

is Seth with from Your Credit Sigman next Suisse. of line the question

Seth Sigman

morning. I the repeat business. follow-up guys, want think Hey do Congrats somebody quarter. to mentioned Two here; the rates. good one, I on online on parts

on or and we color whether that you online, is volume just profitability, could mix be growth about, bit around improvement online both you to seeing If possibly whether losses elaborate get grocery, marketplace you. the there more Thank the that more or in talked it's a improving on that's should continue? it merchandize the then that that of just mentioned for anything or you're or this little to to of this in unique thinking the second the you just quarter losses about trend or general part thought there

John Furner

few things said, a I rates. repeat Yes, on

to number high end who online and high the slots first due of First, the - a of changed, they customers that at XX%. of are asked had pick we channel, hasn't up got then reduce about we've you inventory loyal traditionally up over and rate quarter, back the in not slots number only the to about level, were, slots we second to where quarter, but and had and repeat a the grocery

very are who strong business more. new buying and customers grow So we traditional have In of have online. to to we and part that's continues customers direct the home orders, your a

are there So positives there.

As far as if there is anything related to this.

anomaly it's strong offices we equipment happened not businesses certainly other forecast everywhere could be think The to yet I long that office that has people moving second the where strong home areas are provide to quarter or we within said, tell buying home business are and to eCom trend already beyond building too quarter, home second we're and in early guidance what and determined there as that's of were and that continue, the also how but see headwinds. able

over to of quarters. couple We out those so just next have we'll also see tailwind, the sort

Operator

Benedict line is question Peter with from Baird. next the Our of

Peter Benedict

for thanks question. guys, taking Hi, the

is wanted to the Just little strategy, Thanks. maybe bit on effort? where care which you now. where sits today and right expand understand get that to a some There that you're kind the are changes, on health helpful maybe been where of taking has

John Furner

couple year, go is say great the that committed in the get about here he think market, have a then this job. to we'd at he and he Georgia, Hi, would which have here did that in we that was into this point and than the Florida We at any years Peter, John. talk did really of and also appreciative wanted and announced don't in moving started, two Chicago. into to while he about will some were clinics I we've we and other healthcare. now did We're work change Walmart, a that clinics Sean clinics open was Arkansas, later get strategy

price, quality space. to affordable great -- So and will solution very committed for consumers Americans, the we Walmart remain who healthcare are looking care at for an high high quality be for transparent a access, access

Doug McMillon

Hi, smaller need is needs Dallas, one of the clinic far it's square of you with add have how that. from example I'll investment, many Doug, be a opened recently Peter, some footage We all to I that out seen figure equipment, and kinds not Georgia, in Bentonville, and to this another us, things. the Elm than an this just clinic think those it's trying of sizes we Springs

we're been done preventative expect, still the a the as lot with how during a demand interesting care. to interacting around of So environment. in you team The watch that and medical people playing it of COVID-XX customers the job are keeping environment people an experience clinic safe, in would other with great of and the and it's has necessarily doctor strong professionals is not advantage and taking are where

So I it's think try this learning and we're out. exciting figure period out, even and it to really for and during time, figuring of this COVID-XX interesting -- us and

Operator

with next is Drbul from The the question line Guggenheim. Bob of

Bob Drbul

little you just me back-to-school guess I being morning. gave commentary some Good around a right now. slow

to at have of season most thoughts do us about holiday what color where about might consumer economy you step how think plan season, is, a when the and give you think I is, importantly, about you point in Thanks if the early, the take maybe think the this and could back you you if some guess wondered Just little really it holiday some sort and on time? you're us thinking a give you

Doug McMillon

first. small that will that investments see and X, to lot uncertainty this so, so I customers want say and in the an in This go in obvious relates their is this situation, just much this, happen I’ll Bob, variance is Phase right a sized about think much as important it's of to something country about government's there it folks. that now, one, decision are medium and to to how and economy is but Doug. feeling businesses It's make business, really there small we driven those are support important this help by got

face and all looks I larger to on business probably for the think economy though, financial stimulus. are attention sorted in that think larger the to like the our this group eye need of determine but government's and getting things companies need on it's I other side of we'll just what support, out paying that some that sort particular, companies the we the small keep

John Furner

lower but their ago, finances, opportunities. number who And then I about Definitely, add. think, security year also better a and consumers, also feeling are little job is about than consumers, the the about we of see thinking a are other Bob, I'd are personal of a who and number thinking sentiment we

and shoppers. we'll thoughtful consumer year the plan and I think, food, adaptive from perceive we the rest very general, we so be changes less, money people and the think spending in eating see I be despite on trends will react they're to and of our with more about that way the out the

Operator

question ISI. with the Melich The Greg Evercore of is next line coming from

Greg Melich

in costs, could of and said was million Hi, COVID you sanitation right give for quarter X.X costs, might labor quarter, us anything it quarter? terms in incurred breakdown thanks, persist costs of the of and on you that Thanks. $XXX the think question and versus third first this into fourth that you quarter, the on guys. One the what key incremental the is number

John Furner

Greg. thanks, Yes,

those so in thoughtful and our first part store. payroll are the ability the XX% costs. be the to and year customers is some quarter as continues our second of for take and associates. the one They're to to U.S. that, I million mind quarter we and of bonuses, certainly billion, cleaning as like number billion, rest about associates to Walmart be our but the the it, equivalent the So only, to $XXX in next sorry, about and sanitation benefits, of are costs inside think just those to of related the on that. which going the million, would quarter the $X well, are $X.X would of that our That's other related be $X.X Those safety year potentially and about continue on things

bonus -- so or The obviously bonus, picked forward. -- total number the a So that for announced the that quarter last going something that quarter, last bonus it's is second the higher third little we crew second we're was that than to got do going in the quarter a the up.

main one QX what and would the you that's that'd have So versus seen bonus be additional in difference.

Operator

you. Thank

of comes line with Our next Cowen. question from Chen Oliver the

Oliver Chen

versus you and the manifest that thoughts you ahead insights you. profitability, momentum as delivery may customer automation how and type love also and over All would customer use Hi, your your see about and and data, your what time? thoughts curbside that look what with curbside, thank are at and would the

John Furner

with. The question is Hi, well, Oliver. I'll start automation on all

First, Texas picking and does we New store have able to up our called to on amount Alert from a got of dispensing, that working a over been the pilots system able expanding really months. grocery the automate, We've right increase Hampshire store. few everything a that but in and be we'll we're where with with we're pilot say to next a into picks has couple this deliver

I looking they're think sorts as in is able think for I a number wide going Doug fill people as of what we pay optimistic the learned are for be said, today, who in to orders forward, it's and then from is interested So we'll be appreciate these range of as of a delivery and ways who buy unlimited about there delivery, whether from mostly way in we're far customer delivery the that delivery it and installation are able to up and to and bulk. picking

convenient who convenience country a I in So everyday with over think on, the of fee type this goes plus service. for are lot interested customers Walmart's price delivery of it's more largely looking same but see now. Americans course all we low as are learn time a customer the Well, of and

Doug McMillon

currently, small restaurants It's get closed think much the nice happening comes we're curbside & the that after also quickly, from to being as to they out back as see rolled bigger over. been team I pandemics well-suited so them business aren't Go transactions when Scan serve and will online, the

Operator

Our with next from BMO Bania line Capital. the of question comes Kelly

Kelly Bania

thanks morning, taking questions. for Hi, our good

with down see road to Walmart delivery Plus, test was to Just and headlines into wanted surprised membership with what with the Walmart the about discussion potential the just ask the about with evolve or may with I Instacart. so much there unlimited

the So wondering elaborate just you if on process there. thought help was I could

John Furner

good hi, Kelly, morning. Yes,

the excited about question said, and choose to a hoping week. any and able offer. value to combination it's they one test the it's Oklahoma, we're been California, about and being including way in prospect on what early, then the in is It prices Walmart and then Certainly, only and a to products at market that to customers are learn has of proposition reinforce deliveries Walmart specific access those Instacart. a is you We of

forward report the as read looking no to really or this we're it So at but in. data point, on anything to comes about learning

Operator

with Kelly next is line from Wells Edward Our question of the Fargo.

Edward Kelly

Yes. Hi, good morning.

the shopping kind and just July, then kind are seen to you be on and what in early few color a behavior, on sort of to July, know, consumer just than preparing a margin in the will current gross on as expect relates first win different it thoughts of mostly probably should that we environment, any environment holiday curious we've how and performance you Just historically? anything follow-ups, of

John Furner

as really midst its of margin, the we the break merchandise, general salaries the then by results Hi, of we're stronger as a and a as the and back-to-school. now, in far across the mix, month, and out but result of fewer markdowns are on don't of then in higher quarter, beginning the holiday August and Edward, course season,

the to ready. options shopping, making shop, purchasing and the store open as of of how the wants in XX% of that can schools, that types planning may So however will happening, still change with be different a we're carefully the we're result are so in each you and or but growth want even holidays and thinking of what's results they like sure ready schools with we'll learning is I way to day-to-day, to with online, through team which plans of really both closer contingency working next make experienced pickup, they fulfilment and our addition think sure we're of open, to these everyone they've ready the holidays get to we couple any we The months on customer that shop as decide in plans have be the customer online shifted for will will see and so. over that are

Operator

Our next Capital. from Scott RX with Mushkin comes question

Scott Mushkin

follow-up thanks the Hi, second did guys, came was call that earlier, up by to the for Actually, taking no on question. quarter food want I business, I my think the something grocery on mid-single-digits, overall the you I that out the but guys across issues, some challenge business know up of grocery but a stock industry. single-digits, and was kind a referenced high was up of

difference, maybe back. again if revisit a a I and between it I of take some and say and can was twirls so you the competitors of your of your ran teens, you that like delta, grocery what big that's you competitors? mean, high step kind we that So lot wondering in and looks pretty big a

John Furner

Scott Yes, is this John again.

the late in first billion sales, through comps we're the said increase more the quarter levels number early and I of into better now been in run really earlier, in a impact, said stocks the to a over the chain a and $X which much in the and merchandise, to or for improving again XXXX the with in but of quarter, stronger trips, were not in ticket, at I'm had focused with then but different coming our position. Walmart up internally, what in back general, of the normalized a business you've supply and our change we'll what As early -- most chain category, first about efficient had food are a our XX second quarter issues think early spikes categories then we dealt general p.m. and supply the earlier, the inventory with issues work have number and stocks, we've and growth now out right we through been high and the in we got and we're of average the food our as in of feeling I working quarter fill in just recovery, part its because lean inventory or in pretty the a on is normalized stores quarter. had levels back was until the time, about that the single-digits our big years, We ability has coming over able very an in stock and disproportionate open on sales effect Those

Operator

comes Haskett. from of Gordon Chuck the question next The Grom line with

Chuck Grom

the Hi, throughout could Walmart final about XXXX was then would elaborate I curious, and question these thanks look results, ticket lot. I'm to ticket, Can lapping versus and And be you then you a a you traffic dynamic when great fulfillment services? how in the thinking you're July mostly Thanks. if unpack the on slowdown guys quarter? guys just and guess ahead

John Furner

Chuck. The we're August. Yes. of working Good year, month morning, next on on the lapping question

Chuck Grom

us going in could please tell we it. happen [Indiscernible] if XXXX, you what's would appreciate to

Brett Biggs

needs the how to right, the sure that's question from just we dynamically Back we to first staying ahead us. was are and right, customer your are That's what where evaluating customer constantly is what again? reevaluating, make that so, and

Chuck Grom

Traffic.

Brett Biggs

you was number the -- quarter, then but Traffic trips again, we the we up breakup quarter ticket, traffic are stock XX, up. the yes, don't months saw for down

sell prospect and what or few there, less really often, are of so coming growing is a the with along quarters businesses think this in business what early customers, all while for they're can pickup combination place easily just much our we're and will a they're but valuable on growing the a and larger shopper, customers and excited to So the to the we're marketplace faster eCom of is marketplaces, on and combination than items fast resulted for the permanent are other the the just sellers, the store they're ticket two XX sellers much but relationships bigger provide our fulfillment sellers of we so then -- baskets, do the businesses. about team business, and in, comps, lot of see these a pickup this and and than what buying then, will total, the come in leadership, journey, able is list number about and you than are site, again services, to excited the those which more our a factors

Doug McMillon

Doug. This is

instead we've remind For serve fulfillment to the so assortment shop. point to want positioned they center how and them e-commerce I of capabilities that everybody be got how this pickup, to growing we're stores, at future, served, a want they would delivery,

than home, I more holiday have holiday, we're to with that environment, we up. the plan to see grow know of will of in flexibility while at it. We near-term respond had about done good lot fast actively and so was up you of cadence is reacting in that smile business profitability them things use obtain business have last their fix items, we're brands the job home to they in the would is a our at supported because the years, a there, and team's a to stimulus to home, to few lot of were set and we and a a we speed. is purchasing manage think general guys rate, merchandise the think to company up. much XXXX of unique picked aspects the this then, think quarter was different kind people the grow of at last The managing beyond I for So when because great or some and themselves and checks It online a we've it

percentage is of the that Walmart it strong, business in is GM commonality unique, So, that e-commerce and but is an that contribution was contribution the of encouraging percentage, metric. profit

like. So to I out figure know you're future all trying the what looks

I to think we're opportunities fundamentally to presented. well positioned for react the it and then that we'll manage the are short-term

Operator

Paul line from Lejuez with of is next you. Thank The question Citi. the

Paul Lejuez

gross mix to to gross was and margin Doug which on talk from improvement. just the questions; like can rest for eCom I'm if does much the profitability. the you the of one, if the versus about in Thanks. then, There's profitability margin year-over-year that or eCom of see Hey, second look improvement to basis, up XXX% two XXXX? back for just thanks, about curious year, runs categories guys. talk the segments shift about, maybe How what

Doug McMillon

it that and get better. We sales, more morning, A us you everything was this it's a out. lot reminding Brett else. lot better, helps if figured

going about and to we're talk we've that written So on that. down

that so I they were It's e-commerce walked what the lot I lot at accelerated year We're these world. there but and components know increasingly in in the pieces the some work we're Flipkart happening e-commerce at before. dig went, of of operate, are just look we'll questions won't from your right do. the look P&L are will what of they that's like pieces, we this because and to big but that e-commerce country-to-country. is Canada moving the a omnichannel common, over to the if repeat don't It's you economy what's the the is of focused but this direction an through have tailwinds from presence semantically conversation inside into company, think earlier. how John see, all see next and that, this on where WALMEX, theme the U.S., and a all happening to in that U.S. exciting more course common and learning about and is looking strategy are more but the conversations P&L these wait starting

Brett Biggs

been I mentioned was as of and mixed. very merchandise lot On a general there merchandise general gross focused we've business was that margin, things, to nice of said, Doug number different it really see Certainly on which a it's markdowns quarter, a markdowns, more of of fruition just also also, story QX, margins lack fuel come part big markdowns in sell part the were to of better. and the your were but and of big story in second

for that the all it's quarter. our of things So really were those in three favor

Operator

from with comes question Edward of the Yruma KeyBanc. next Our line

Edward Yruma

then California your in Thank changes perspective? ABX non-essential If update guess, comps, you've this discernible taking us opened Could last some you. I roll-up up, see been just on give an kind store your know to as did you any quickly I of due difference? you of for question. membership to about think peers and thanks there. Spark lot a innovating you you mile. the a really ability from when second, on see Hey, any

Doug McMillon

X,XXX stores. mile, last today under some stores of in faster now about with we've on in from around that you hours line that Edward expanding delivery two we're just got more, even can than X,XXX sight delivering is in service in which a expect Express, cases

are and those bigger. numbers getting big So

a and in is aware platform we're on a then… growing, for business and and Walmart the strong, So the the well as I for expand we're Spark to you’re delivery ability center and to team innovations mostly in Midwest, easy, running that easier Spark that's is program the of country think drivers the its that were working service others, and doing it's this excited about in that make the

Brett Biggs

wanted eating impacted being things and to home, order pleasurable Edward my tailwinds you order stimulus, And spending indoors all that. and three, and things, business were, a the that things of customer then on the you're the one, last like you the it's on weren't sense money at home question, and if that that and two, travel do the have to the be at outdoors more lodging of

you tailwinds competitors home things were for were things available to buy were than whether other dollars Those your as those are for more not the or that well. impactful open. So

Operator

from The line the question is next Ben Stephens. with of Bienvenu

Ben Bienvenu

nice in everybody. to the business capital working has Hey, I tailwind a morning, last for couple in the inventory payables of Good thanks. quarters and obviously, particular and have inventory for receivables done. really of around capital light working been wanted what ask

You've cash balance of sizable capital about, built-up are positioning how or inventory otherwise, guys and you in could to you then you if us working going normal have positioning think forward, balance on a normalization would been cash for help a whether Where that preparedness you think environment? I about liked the they're down sheet, particular, the X.X%. it's in have pretty Where think about that? balance

Doug McMillon

everywhere. we quarter, but out reported, but having were needed pork sporting second and to goods, have pressure were inventory were would in stock a what on lot beef too, wanted of of eCommerce had fabrics. in early this Doug. if stores like, us were we've Brett walk in the that some in concerning, some we obviously in deeply We're scrambling we the we we and with have is questions. obviously capital quarter, Ben, were the was you a we because well in more quarter but feeling and laughing challenges will second the could the lot during we than I pressure respond portions than second you've a been to We working categories it that just today, used we better across felt the stores was lighter team look really Supercenter inventory lot was and saw could we remarkably here be.

Brett Biggs

million go fishing when before that has Just regular million. Americans we to an on example, Ben, February, about now number and a think XX XX moved would basis

playing way. So bicycle XX same Golf, this and million people hobby just decided is to the one pick-up

Doug McMillon

tackle this what love that this and of bombers really and I the different terminal kind lead requires. like on fishing still stuff week than environment and basic time it, we're hooks in liking

Brett Biggs

general, working continue just on. how everything then down about our with support hasn't timing, a on about and think that's interrupt but business, to I Then allocation wanting to changed. capital that capital, not would we bit, little CapEx going in think stores is just the it more really We're our to going

little built because hand -- generating than that just to cash protect wouldn't a a the little that far view have of and the allocation, more bad time just I we capital that. have but but not cash about more come have than past, cash also it's we're and about up normal, We as in some extra a wouldn't any as of as opportunities would on ensuring bit changes we business say I in

Ben Bienvenu

Thank you.

Operator

we of session. time, reached question-and-answer have At the this end our

will Now, floor turn I comments. for back the Doug to closing

Doug McMillon

company, in anything we We for you dialing else than attention Thanks. the to today. paying and appreciate don't thanks say to have other

Brett Biggs

Thank you.

Operator

This today's Thanks, concludes everyone. conference.

may thank you have You disconnect lines for this now a your day. wonderful time. at participation, We your and

Walmart (WMT) 18 Aug 202021 Q2 Earnings call transcript