The operator welcomes participants to Walmart's Fourth Quarter Fiscal Year 2024 Earnings Conference Call and introduces the speakers. The format of the call will include remarks from the CEO and CFO, followed by a Q&A session. The call will be recorded and may include forward-looking statements. The CEO highlights the company's strong performance in the quarter and fiscal year, with sales growth of 4.9% and adjusted operating profit growth of 10.9%.

The second paragraph of the article discusses the positive performance of Walmart during the holiday season, including increased transaction counts and market share, improved inventory levels, and strong customer experience scores. The company also achieved $100 billion in global e-commerce sales for the first time. The article highlights the success in various countries, including the US, Mexico, Canada, India, and China. Walmart is focused on providing value to customers through lower prices, particularly in food and general merchandise categories. Private brand penetration is also increasing in many countries.

The company is currently experiencing a decline in prices for general merchandise in Walmart U.S., but the trend has softened in Q4. However, prices for food and consumables have slightly increased compared to last year. Despite this, the company is seeing strong performance in terms of units and transactions. They are focused on long-term growth through investments in store remodels and supply chain automation, as well as opening new stores and converting some existing locations.

In the upcoming year, Walmart plans to open 230 stores and clubs in Mexico, Central America, and China. They have a strong presence in China with 47 Sam's Clubs and are focused on strengthening their physical stores while also expanding their e-commerce capabilities. The marketplace aspect of their business is growing, especially outside the U.S., which helps drive their global advertising business. The recent acquisition of Vizio will also help Walmart reach and serve customers in new ways. They are also looking to enhance their membership offerings, as Walmart Plus members spend more and buy more over the course of a year.

Sam's Club U.S. is implementing new exit technology that allows members to use Scan & Go to quickly leave the store after completing their transaction on their phone. This aligns with their description of being a people-led, tech-powered, omni-channel retailer. Examples of their technology include a generative AI search tool on the Walmart U.S. app and drone delivery. They are also working on improving the in-store experience through store remodels.

The company's flexible supply chain allows customers to choose from different delivery options, and the company is on track to meet financial targets while also investing in the future. The company is also focused on sustainability and has exceeded their goal of reducing greenhouse gas emissions. They encourage a sense of ownership among their associates through stock options and a stock split.

In the final paragraph, the speaker thanks the associates for a successful quarter and discusses their plans to build on their momentum. They achieved strong net sales and operating income growth in the past year and have a clear strategy for continued growth in the future. The speaker then recaps the Q4 results using the framework of growth, margins, and returns, and highlights the strong sales growth from all three segments, particularly in e-commerce. International sales and e-commerce penetration also saw significant growth.

The paragraph discusses the success of Flipkart's Big Billion Days event and Walmart's overall performance during the holiday season. Walmart saw an increase in comp sales and e-commerce sales, as well as gaining grocery market share. The company also saw an expansion in gross margins and a decrease in inventory. However, there was some pressure on margins due to the timing of Flipkart's event. SG&A expenses also deleveraged due to higher variable pay expenses. Overall, there was improvement in e-commerce profitability for Walmart U.S.

Walmart has seen success in its e-commerce fulfillment and last mile delivery, resulting in lower costs and improved margins. They have also experienced strong growth in their global advertising, with a new partnership with Vizio expected to bring even more opportunities for advertisers. The deal is expected to close in FY 2025 and may be slightly dilutive to EPS in the short term, but is expected to be IRR accretive in the long term.

In the fourth quarter, Flipkart and Walmart's Marketplace and Fulfillment Services saw double-digit growth, with strong holiday events and increased sellers. Sam's Club and Walmart Plus also experienced growth in membership and income. Adjusted operating income and EPS also saw significant growth, while ROI improved and the dividend was raised by 9%. The company remains committed to strong cash returns to shareholders and aims to grow operating income faster than sales.

The company has identified four key areas that will contribute to improved margins in the future: business mix, productivity benefits from supply chain transformation and automation, product mix, and geographic mix. The growth of newer, higher-margin businesses such as global advertising, Walmart U.S. Marketplace, and global membership income is expected to drive operating income growth. The company is also investing in supply chain transformation and automation, with 13 regional distribution centers already retrofitted. These initiatives will allow the company to fund investments in its core business and expand operating margins.

Walmart is implementing new technology in its distribution centers and stores to improve productivity and customer experience. By the end of FY 2026, the company plans to have automation in 55% of its fulfillment centers and 65% of supercenters. This technology includes applications such as RFID and computer vision, as well as digital displays and labels to enhance efficiency for both customers and associates. The company expects to see financial benefits from this technology in the second half of FY 2025, including cost savings, inventory efficiency, and increased associate productivity. Additionally, Walmart is focused on expanding its e-commerce assortment, particularly in general merchandise, to attract and retain customers. The company also plans to continue remodeling stores and returning to store growth in the US.

Walmart's supercenter stores are resulting in stronger sales and improving customer perception. However, they expect relative weakness in certain general merchandise categories to continue in FY 2025. The company's international portfolio is expected to be a larger contributor to sales and profit growth, with India, Walmex, and China leading the way. Walmart is introducing a slightly wider range of potential outcomes for FY 2025 due to the size and variability of their business. Additionally, the leap year in Q1 may have an effect on their Q1 guidance.

In the fourth quarter, Walmart expects to experience a 53rd week for comp sales and has announced a three-for-one stock split. For FY 2025, they anticipate net sales to grow 3-4% and operating income to grow 4-6%, with all three segments contributing to growth. This aligns with their multi-year plan of 4% sales growth and faster operating income growth. In the first half of FY 2025, sales are expected to grow faster than operating income due to technology spending, but in the second half, operating income is expected to exceed sales growth. For the full year, operating income is projected to grow 150 basis points faster than sales, similar to FY 2024.

The company expects operating income to grow faster than sales on an annual basis and has provided guidance for interest, tax rate, and non-controlling interest. They expect FY 2025 EPS to be in a range of $6.70 to $7.12 on a pre-split basis and $2.23 to $2.37 on a post-split basis. They will continue to invest in technology and innovation and expect CapEx to range between 3% to 3.5% of sales for the next couple of years. For Q1, they expect sales growth of 4% to 5% and operating income growth of 3% to 4.5%. They also thank their associates for their role in the company's success and are excited to make their stock more accessible to them.

The speaker, John David Rainey, is responding to a question about Walmart's outlook for fiscal year 2025. He explains that last year, there was a more pessimistic outlook due to the possibility of a recession, but this year there is more optimism about the economy. He also mentions that price levels play a role in their forecast and that they expect improvement in gross profit, but not through raising prices.

The company has seen an improvement in gross profit due to changes in their business mix, with faster growing higher margin parts of their business contributing significantly. However, they do expect some deleverage in their business, as they focus on becoming more efficient and leveraging aspects of their business. The company's focus is on growing operating income, and they anticipate a headwind in product mix going into the coming year. They are most focused on executing their plan, but acknowledge that economic outcomes could impact their performance. Overall, they feel confident in their current plan and execution. The next question is from Krisztina Katai with Deutsche Bank.

Krisztina Katai asks about the improvement in gross margin and the drivers behind it. John David Rainey attributes the improvement to a healthier inventory and lower markdowns. John Furner adds that the team is committed to driving value for customers and mentions that rollback count is up and NPS levels are at an all-time high.

The company saw a strong sell-through and a decrease in inventory, leading to lower markdowns and a better gross margin. The improvement in e-commerce contribution margin was due to lower fulfillment costs and a densification of the network. The company is satisfied with their inventory levels and the performance of their store managers and associates.

In the paragraph, the speaker discusses the increase in Walmart's weekly active customers on e-commerce, which has contributed to the company's overall profitability. They have a clear plan to reach e-commerce profitability even without additional subsidies. The company's growth and scale have helped in this regard, and they are now in execution mode. The speaker also mentions the success of their omni-channel strategy and the progress of their digital penetration in China, which has increased from 4% to 48% in just a few years.

Doug McMillon, CEO of Walmart, discusses the company's success in both offline and online sales and their plans for fiscal year 2025. He highlights the importance of driving sales and investing in the business, including associate wages and price competitiveness. He sees opportunities in various categories and believes their merchant skills will continue to drive growth. Overall, he is pleased with their current reinvestment rate and expects to grow operating income faster than sales.

The speaker discusses three key areas that they are focused on to drive growth in their business. These include top line growth through various methods of serving customers, implementing automation to improve efficiency, and utilizing the marketplace and advertising to change the business mix. The speaker also mentions the success of remodels in the Walmart U.S. general merchandise category and the potential for a return to positive growth in the future.

The speaker discusses the growth of the company's top and bottom line and their plans to invest in the future. They mention their success in remodels and strong performance in various departments, including apparel, home, beauty, and toys. The company also highlights their success in seasonal sales and their strong advertising growth of 28% for the year.

The speaker responds to a question about the potential impact of recent acquisitions on the company's profitability. They confirm that the estimated contribution from advertising is correct and express excitement about the Vizio acquisition, but cannot provide further details due to the deal not yet being closed. They suggest saving questions for a later time and focusing on the company's overall strategy for now.

The operator introduces a question from Robbie Ohms of Bank of America regarding Walmart's transaction comps. Ohmes asks about the strong 4.3% growth in Walmart U.S. and how it was driven by grocery and e-commerce sales. He also asks about the sustainability of this growth and the factors driving it. Walmart's John Furner responds that the increase in customers and frequency of visits, as well as the use of same-day and express delivery services, are contributing to the growth across all business units.

The speaker discusses the importance of having a short last mile in e-commerce and how stores being able to fulfill orders has helped the brand and reduced delivery costs. They also mention the use of RFID technology and improved inventory levels in stores, which has led to improved accuracy and customer satisfaction. The speaker believes that as automation increases, these improvements will continue.

Doug McMillon, CEO of Walmart, discusses the company's use of AI technology in the past 12 months and its plans for the future. He mentions the benefits of generative AI, such as improving customer and employee experiences and reducing costs. However, he notes that it is too early to quantify the specific impact of AI on the company. The most significant improvement so far has been in the search function, which has led to better Super Bowl search results and is being implemented across all markets.

Walmart has implemented AI technology in their Me@Walmart app and Sam's Club to improve efficiency and customer experience. They are prioritizing and investing in the biggest opportunities for AI, but also making it available to all associates. Sam's Club has also introduced an "easy exit" process using computer vision and AI, which has received positive feedback from customers. Walmart is constantly looking for ways to innovate and personalize their interactions with customers. The ultimate goal is to remove all manual steps in the shopping process.

During a conference call, Walmart's John Furner responds to a question from Paul Lejuez about rollbacks. Furner reports that rollbacks are up around 50% compared to last year and are spread evenly across the store. He also mentions that the food business is not showing as strong of results as the general merchandise category. Furner gives examples of successful rollbacks, such as lowering the price of French bread and rotisserie chicken. He also notes that funding for rollbacks is balanced and merchants have various strategies to manage their margins.

The speaker discusses the company's market share gains and how they have been largely driven by wins with higher income consumers. They also mention that the value for convenience is just as important as the value for price, and this resonates with customers of all income levels. The company's value proposition is successfully attracting customers and they are shopping in new ways compared to the past.

In the paragraph, Kathryn McLay and Doug McMillon discuss the correlation between market share gains and improvements in MPS and price gap. They also mention the importance of providing customers with a great price, environment, value, and experience, and how remaining flexible can save customers time. They reiterate their confidence in their ability to grow by serving customers in various ways, and mention their plans for improving their supply chain and growing profit while investing in their associates and business.

The company plans to increase profitability through a combination of business mix, automation, and focusing on high-return investments. They are confident in their growth potential and are excited about the transition to automation. The call ends with the speaker thanking participants for their time.

This summary was generated with AI and may contain some inaccuracies.