The paragraph is an introduction to Walmart's Fourth Quarter Fiscal Year 2025 Earnings Call. The Operator welcomes participants and hands the call over to Steph Wissink, Senior Vice President of Investor Relations. She introduces key executives, including Walmart's CEO Doug McMillon and CFO John David Rainey, who will discuss quarterly results before taking questions. Segment CEOs will join for the Q&A session. The call includes cautionary notes on forward-looking statements, highlighting risks and uncertainties. Doug McMillon then begins by noting the company's strong quarterly performance and commending associates for their service.

In the quarter, the company experienced a sales growth of 5.2% and a 9.4% increase in adjusted operating income, benefiting from increased market share and transaction volumes. They highlight a strong top line driven by low prices and convenience, with U.S. and Sam's U.S. general merchandise sales up slightly. Profit growth outpaced sales, with potential in higher-margin areas like membership and advertising. Capital investments are improving ROI, yet all business segments performed well, including successful holiday seasons in the U.S., Mexico, Canada, China, and India. Lastly, the fintech division PhonePe is preparing for an IPO in India. The company maintains healthy inventory levels while striving to reduce prices.

The paragraph highlights Walmart U.S.'s initiatives to expand product range, improve delivery speed, and enhance customer satisfaction. Walmart has introduced same-day pharmacy delivery, which has been well-received, allowing customers to get a variety of products quickly. Sam's Club has also launched a new shipping offer with free same or next-day delivery, contributing to high customer satisfaction. Walmart is applying delivery solutions from international markets like China to other areas, investing in supply chain automation, and leveraging AI technology. The company is proud of its tech team's efforts and introduces a new AI agent for merchants called [Wally].

The paragraph discusses several advancements and cultural strengths within the company. It highlights the use of a tool named Wally to improve inventory management, and new coding tools that have saved significant developer hours, with plans to expand their availability in North America and India. As the company moves to new home office buildings in Bentonville, it emphasizes the importance of maintaining its core values and culture, such as leadership, humility, and cost-efficiency, which are essential for saving customers money and enhancing their lives. The company expresses excitement about the future and invites people to visit during an upcoming event. John David Rainey is then introduced.

Walmart reported a strong fourth quarter and full-year performance, surpassing sales, profit, and earnings expectations. The company achieved a 5.6% increase in consolidated revenue and significant growth in adjusted operating income and EPS despite currency headwinds. The growth was driven by value offerings, an improved customer experience, and share gains. E-commerce, global advertising, U.S. marketplace revenue, and membership income all contributed to the positive results. Walmart's business model continues to deliver sustainable growth, with expectations for its diverse portfolio to drive operating income growth faster than sales in the future.

The company has developed new profit streams that have improved its return on investment and supported a significant dividend increase. Capital expenditures reached $23.8 billion, focusing on store remodels, new constructions, supply chain automation, and productivity enhancements to improve customer experience and reduce costs. Significant investment in the omni-retail business has transformed the company over five years, with global e-commerce now comprising 18% of sales. Marketplace capabilities in the U.S. have expanded the assortment and increased e-commerce orders fulfilled from stores by over 500 million, without new store growth. Fulfillment capacity is being expanded with investments in automation. Although the channel mix shift to e-commerce presents some cost pressures, improved profitability has been seen through delivery efficiencies and new e-commerce-driven business contributions.

Despite facing margin pressures due to a shift in sales towards groceries and health products, Walmart has grown its operating income faster than sales by focusing on diversified profit sources like advertising and membership. In the fourth quarter, Walmart saw over 5% growth in consolidated revenue, driven by a 16% increase in e-commerce, although currency fluctuations negatively impacted reported sales. Walmart U.S. saw a 4.6% increase in comparable sales, including a 20% rise in e-commerce, with strong performance in grocery, mid-teens growth in health and wellness due to GLP-1 sales, and modest improvements in general merchandise. The company attributes its growth to increased customer transactions and expanding same-day delivery coverage to 93% of U.S. households.

The paragraph discusses the impact and growth of expedited delivery services, with over 30% of orders opting for faster delivery. The launch of same-day pharmacy delivery has attracted new customers, integrating pharmacy, general merchandise, and groceries in a single order. Despite dealing with food inflation in certain areas, overall pricing has seen deflation in general merchandise. Sales growth internationally, particularly in China, Walmex, and Canada, remains strong, with a notable increase in e-commerce sales outside India and rapid delivery within three hours for a large portion of orders. In the U.S., Sam's Club reported a 6.8% increase in comparable sales, driven by transaction and unit volume growth.

The paragraph discusses the growth and strategy of an e-commerce business within a warehouse club setting. E-commerce sales increased by 24%, driven by features like express delivery and the elimination of curbside pickup fees. The company has enhanced digital solutions, such as Scan & Go and Jusco Exit towers, to differentiate in the market. Consolidated gross margins improved due to efficient inventory management and reduced markdowns, while international margins benefited from promotional timing shifts. E-commerce economics improved with a 20% reduction in delivery costs. The company is diversifying profits through advertising, membership, and data analytics, with global advertising revenue growing by 29%, driven by Walmart Connect. The company is also expanding its advertising capabilities by incorporating VIZIO's SmartCast system.

The paragraph highlights several positive developments for Walmart. VIZIO is contributing to new customer engagement and advertising opportunities, boosting product discovery. Membership income grew 16%, with growth in Sam’s Club and Walmart Plus memberships in the U.S., and significant increases in Sam’s Club China membership income. The U.S. marketplace saw a 34% growth, with various categories showing over 20% increases in sales and fulfillment services reaching new highs. Internationally, Mexico and Canada also showed growth in sellers and item sales through Walmart fulfillment services. Walmart Data Ventures expanded rapidly, with a doubled client base and extended reach into Canada; however, SG&A expenses rose slightly due to tech investments and increased variable pay in the U.S.

The paragraph discusses the financial impact of various factors on the quarter, including transaction-related expenses from acquiring VIZIO, timing shifts of Flipkart's BBD event, and wage investments at Sam's Club U.S. While these wage investments are initially expected to pressure profits, they have led to positive outcomes like increased member renewals and decreased associate turnover. The business is focused on optimizing efficiency and balancing investments for better returns to customers, associates, and shareholders. The quarter saw over 5% sales growth and over 9% growth in adjusted operating income, exceeding forecasts, and adjusted EPS was favorable at $0.66. There were minor negative impacts on reported EPS from currency and acquisition costs. Looking ahead, Walmart anticipates a stable yet uncertain macroeconomic environment, similar to recent years, and remains confident in its ability to provide value to customers and shareholders.

For fiscal year 2026, the company anticipates consolidated net sales growth of 3% to 4%, factoring in the negative impact of leap year effects and positive contributions from VIZIO sales. Operating income is expected to grow by 3.5% to 5.5%, despite a 150 basis point negative impact from VIZIO acquisition costs and leap year effects. Adjusted EPS is projected between $2.50 and $2.60, with a currency-related reduction of about $0.05 per share and a higher effective tax rate. Sales and operating income growth are provided on a constant currency basis, but if current exchange rates persist, there could be a significant negative impact, especially in the first half of the year. Capital expenditures are projected to be 3% to 3.5% of sales, aimed at technology investments for supply chain optimization and store developments. In Q1, net sales growth is expected to be 3% to 4% in constant currency, with challenges from leap year and Easter timing. Operating income is anticipated to grow 0.5% to 2% after accounting for acquisition and leap year impacts.

The paragraph discusses Walmart's financial guidance, noting several factors impacting year-over-year growth rates, such as the Easter timing shift and consumer stimulus from the previous year in Walmex. The core business remains strong with an expected operating income growth of 15% over two years. Enterprise net sales and operating income growth should remain steady across quarters, adjusting for calendar impacts, with expectations of first-half growth aligning with full-year guidance. Current exchange rates may pose headwinds to sales and operating income growth. The first-quarter EPS is projected to be between $0.57 and $0.58, with a currency impact of about $0.02 per share and a higher tax rate. Walmart acknowledges challenges ahead but remains optimistic about its business strategy for fiscal year 2026. The paragraph concludes with appreciation for associates' contributions.

The paragraph details a conversation during a company earnings call. Michael Lasser from UBS asks Walmart about its economic sensitivity and how it affects sales and EPS guidance for 2026, noting that the company has gained market share and appeared insulated from broader economic issues. Doug McMillon, Walmart's CEO, responds by emphasizing the company's ongoing focus on providing value and convenience, resulting in strong quarterly performance. He expresses confidence in continued momentum across various business areas. John David Rainey, likely another executive, is mentioned as preparing to add further comments.

The paragraph discusses Walmart's positive outlook and performance, emphasizing its increasing reputation for convenience and value. The company has seen strong financial results, with January being a particularly strong month. Its e-commerce margins were notably high at 11%. Despite some market unpredictability, Walmart is confident in its 5% to 7% growth outlook for next year. This reflects a consistent approach with previous years and the company's confidence in its business model and customer relevance. CEO Doug McMillon highlights these positive indicators as a sign of Walmart's confidence and improved business prospects.

The company is optimistic about its current position, entering the year with strong momentum in sales and inventory levels. Inventory has increased by 2.8%, aligning with expectations, and sales are progressing well. Kate McShane from Goldman Sachs inquires about the mix impact on gross margins and the status of alternative revenue businesses. Doug McMillon acknowledges potential growth in new businesses, while John Furner expresses pride in the team's performance, noting improvement in general merchandise sales and unit flow.

The paragraph discusses the positive performance and growth seen in inventory and sales. Doug notes a 3% improvement in inventory performance, improved gross margin, and savings on markdowns due to strong sell-through and seasonal sales. Over 5,800 product rollbacks in stores are mentioned, with over 1,000 added recently, highlighting a focus on value. Chris Nicholas comments on the momentum in sales, particularly in January, and successful investments in member value and digital engagement. He notes growth in general merchandise despite some deflation, with strong sales in TVs, technology, and apparel. Kath McLay adds that internationally, particularly in Mexico and Canada, there were strong general merchandise sales in Q4, especially during events.

The paragraph discusses Walmart's strong sales performance in Walmex during the "Elfin Irresistible" event, particularly in general merchandise (GM) and apparel. John David Rainey explains that although there was a slight decrease in GM mix last year, they expect a smaller decrease this year and are excited about their efforts in GM, bolstered by their growing marketplace categories like automotive and toys. Simeon Gutman from Morgan Stanley asks about the potential for faster reinvestment in the business given rising e-commerce margins, suggesting that increased investment in marketing and e-commerce could yield higher returns. Rainey is asked to elaborate on the strategy of balancing reinvestment and growth.

John David Rainey discusses the company's current strategy of balancing investment and margin expansion, emphasizing the importance of investing in price, associates, technology platforms, and supply chain automation. These investments have contributed to their recent strong financial results. Looking ahead, the company sees opportunities for continued margin improvement while maintaining investments for long-term growth. Rainey stresses the importance of not prioritizing short-term performance at the expense of future growth. Kelly Bania from BMO Capital Markets asks about the company's 5% to 7% EBIT growth guidance, considering factors like tariffs and potential consumer response, and whether these could impact earnings.

The paragraph discusses the ongoing impact of expedited orders and tariffs on e-commerce profitability. Doug McMillon explains that while tariffs have been managed effectively for years, their future remains uncertain. However, the company aims to save customers money and improve delivery speed. They are optimistic about leveraging their assets and technology, such as generative AI, to enhance efficiency and decision-making. The business model is evolving, allowing strategic management for long-term growth while delivering quarterly results. John David Rainey notes that their current guidance does not explicitly factor in tariffs.

The paragraph discusses the company's confidence in navigating uncertain economic conditions, noting the potential for deviations from their expectations but expressing optimism in their capabilities. It highlights the positive diversification of the business, with new sectors like advertising, membership, and WFS contributing significantly to operating income growth. The text emphasizes the high-margin potential of digital channels and improved e-commerce profitability, including an 80% reduction in e-commerce losses in the U.S. The company's omnichannel strategy, encompassing curbside, in-store, and delivery growth, is considered a competitive advantage. Chuck Grom congratulates the company on its successful quarter and year.

John Furner expresses enthusiasm about the growth of Walmart Plus, noting consistent increases in membership and order frequencies in recent quarters. He highlights significant growth in their fast delivery services, particularly with same-day and under-three-hour deliveries, which grew by 180% year-on-year. Walmart Plus members heavily contribute to this growth, showing strong repeat rates. Additionally, the launch of their pharmacy delivery program is gaining traction, with many customers using the service to build larger orders when having prescriptions delivered, benefiting both acute and regular prescription needs.

The paragraph discusses a range of topics related to Sam's Club and Walmart, primarily focusing on membership growth and inflation expectations. Doug McMillon notes that Sam's Club memberships and renewal rates are at all-time highs due to investments in the member value proposition and improved associate and wage investments. This has resulted in reduced turnover. Kath McLay adds that international memberships have also grown significantly, particularly in Sam's Club China, and mentions a successful program called Beneficios launched in Mexico to understand customers better and personalize services. The paragraph concludes with Mike Baker from D.A. Davidson asking about the overall consumer environment and confidence.

In the paragraph, Doug McMillon addresses a question about the economic environment and clarifies his earlier comments regarding anticipated storm clouds, noting that while they saw potential challenges, those challenges have not materialized, and the situation remains consistent. John Furner agrees, stating the consumer environment is resilient, with slight shifts in buying patterns but positive trends in recent quarters. They are optimistic about their strategies, particularly in omnichannel fulfillment, and ready to meet customer needs in various ways. The team is experienced in handling economic changes and is prepared to react as necessary. Additionally, it is mentioned that there were lower markdowns in the fourth quarter.

John Furner discusses the company's focus on managing inventory and gross margins effectively, emphasizing improvements in technology and supply chain management to better understand and deploy inventory. The company is proud of increased gross margins, attributed to both merchandise management and new digital services. They aim to maintain value for customers through price control and adapting to promotional environments. Kath McLay added that the company is pleased with top-line growth in the Canadian market.

The article discusses Walmart's e-commerce growth in Canada, with a 30% increase and accelerating growth every quarter over the past year. The company focuses on offering value, exemplified by a Canadian Thanksgiving meal for four priced at CAD 40. The paragraph also mentions a conversation during a call, where Seth Sigman from Barclays inquires about Walmart's acquisition of VIZIO. John David Rainey, representing Walmart, explains that while there will be a short-term dilution cost of around 70 basis points, the acquisition is expected to become accretive next year. He emphasizes the potential for new customer channels through VIZIO, with John Furner adding his excitement over the acquisition and praising VIZIO's frictionless operating system.

The paragraph discusses Walmart Connect's plans to enhance its advertising distribution and mentions the ongoing integration process following an acquisition. The company aims to efficiently support sellers and suppliers over the next year. During a call, Zhihan Ma from Bernstein asks about improving e-commerce profitability, particularly through alternative revenue streams and cost reductions. John David Rainey responds by highlighting that advertising and membership account for over a quarter of their operating income, emphasizing positive growth in these areas. Key drivers of e-commerce profitability include network densification, which involves delivering to multiple houses within the same area, thereby improving unit economics.

The paragraph discusses the profitability and growth prospects of the e-commerce business, particularly highlighting the success of express delivery options, where many customers pay extra for faster delivery. It mentions that newer business segments like membership and advertising are improving margins. Doug McMillon, responding to a question, explains that e-commerce, combined with these components and data monetization, enhances overall operating income and profitability compared to traditional retail. He emphasizes the importance of sustaining e-commerce growth and meeting customer needs through omni-channel options.

The paragraph is a part of a discussion during an earnings call, where Robbie Ohmes from Bank of America asks about Walmart's operating expenses and SG&A (Selling, General, and Administrative expenses) ratio. John David Rainey responds by noting the shift in Walmart's business towards e-commerce, which now accounts for 18% of their operations. This shift leads to higher SG&A costs compared to traditional brick-and-mortar sales. He explains that while there are pressures from this channel mix change, Walmart continues focusing on maintaining low costs. He also mentions Walmart's recent strategic investments in areas like marketing, which have contributed to improvements in their general merchandise segment.

The paragraph discusses the impact of supply chain automation on a company's cost structure, noting that less than half of U.S. stores are fully automated but improvements are being seen. Doug McMillon mentions excitement about showcasing facilities in Dallas and refers to a positive past experience in Florida. Corey Tarlowe from Jefferies asks about the growth and profitability of PhonePe and ROI statistics. Kath McLay responds, sharing that PhonePe reached 1.7 trillion TPV with 310 million daily transactions and is preparing for an IPO, marking a significant milestone as it approaches its 10-year anniversary.

The paragraph discusses a company's financial strategy and outlook, highlighting their focus on increasing ROI through investments, such as supply chain automation, which have yielded returns up to 20%. John David Rainey expresses confidence in achieving historical highs in ROI over time. The company is nearing an inflection point in both earnings and free cash flow, supported by business changes. They have increased dividends by 13% and plan to buy back more stock than the previous year, reflecting confidence in their business. Additionally, they will continue investing in the business through capital expenditures (CapEx).

In the closing remarks of the conference, Doug McMillon expresses optimism about the company's future, highlighting its youthful energy and innovation, such as advancements in technology and a new office location. He appreciates the company's ability to consistently deliver strong results, emphasizing saving both time and money for customers, which drives growth. McMillon is impressed with both short-term executions, like market share and pricing strategies, and long-term growth returns on investment. He notes the strong performance across all segments, especially internationally, and feels confident about starting the new year positively.

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